10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-39223

Muscle Maker, Inc.

(Exact name of registrant as specified in its charter)

Nevada	47-2555533
(State or other jurisdiction	(I.R.S. Employer
of incorporation)	Identification No.)

1751 River Run, Suite 200,

Fort Worth, Texas 76107

(Address of principal executive offices)

Registrant’s telephone number, including area code: (832) 604-9568

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	GRIL	The NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares if the Registrant’s common stock, $0.0001 par value per share, outstanding as of May 10, 2023, was 32,197,066.

Muscle Maker, Inc.

Quarterly Report on Form 10-Q

For the Three Months Ended March 31, 2023

	Table of Contents	Page
PART I	FINANCIAL INFORMATION	4
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2023 and December 31, 2022	4
	Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2023 and 2022	5
	Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) for the Three Months Ended March 31, 2023 and 2022	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2023 and 2022	7
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
Signatures		54

3

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Muscle Maker, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	March 31, 2023	December 31, 2022
	$’000	$’000
Assets
Current assets:
Cash	6,386	9,898
Accounts receivable, net of allowance for doubtful accounts of $28.8 thousand and $23.4 thousand as of March 31, 2023 and December 31, 2022, respectively	4,961	135
Inventory	35,145	298
Prepaid expenses and other current assets	206	317
Total current assets	46,698	10,648
Right to use assets	2,189	2,433
Property and equipment, net	1,680	1,895
Goodwill	2,626	2,626
Intangible assets, net	4,301	4,611
Deposit on farmland	5,002	4,914
Security deposits and other assets	102	103
Total assets	62,598	27,230
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	35,863	1,953
Accrued stock-based compensation expense - related party	3,400	3,603
Notes payable, current	225	222
Operating lease liability, current	505	560
Deferred revenue, current	90	95
Other current liabilities	195	182
Total current liabilities	40,278	6,615
Notes payable, non-current	722	759
Operating lease liability, non-current	1,800	2,019
Deferred revenue, non-current	1,228	1,276
Total liabilities	44,028	10,669
Commitments and Contingencies
Stockholders’ equity:
Common stock, $0.0001 par value, 150 million shares authorized, 32.2 million and 29.3 million shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	3	3
Additional paid-in capital	98,988	95,913
Accumulated deficit	(80,421)	(79,355)
Total stockholders’ equity	18,570	16,561
Total liabilities and stockholders’ equity	62,598	27,230

See Accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited)

4

Muscle Maker, Inc.

Condensed Consolidated Statement of Operations

(Unaudited)

	Three Months Ended March 31,
	2023	2022
	$’000	$’000
Revenues:
Commodity sales	210,366	—
Company restaurant sales, net of discounts	2,301	2,694
Franchise royalties and fees	284	208
Franchise advertising fund contributions	16	18
Total revenues	212,967	2,920
Operating Costs and Expenses:
Commodity operating expenses:
Commodity cost	205,055	—
Labor	620	—
Other commodity operating expenses	154	—
Total commodity operating expenses	205,829	—
Restaurant operating expenses:
Food and beverage costs	839	1,026
Labor	880	1,073
Rent	274	340
Other restaurant operating expenses	472	650
Total restaurant operating expenses	2,465	3,089
Depreciation and amortization expenses	633	476
Franchise advertising fund expenses	16	18
Pre-opening expenses	36	—
Post-closing expenses	94	—
Stock-based consulting expenses	3,359	—
Sales, general and administrative expenses	2,142	1,324
Total costs and expenses	214,574	4,907
Loss from operations	(1,607)	(1,987)
Other Income:
Other income / (expense)	—	(19)
Interest income / (expense), net	3	(18)
Change in fair value of accrued compensation	541	—
Gain on debt extinguishment	—	140
Total other income, net	544	103
Loss Before Income Tax	(1,063)	(1,884)
Income tax	3	2
Net loss	(1,066)	(1,886)
Net Loss Per Share:
Basic and Diluted	(0.04)	(0.07)
Weighted average Number of Common Shares Outstanding:
Basic and Diluted	29,443,394	27,801,604

See Accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited)

5

Muscle Maker, Inc.

Condensed Consolidated Statement of Changes in Stockholders' Equity

(Unaudited)

	Common Stock		Additional Paid-in Capital	Accumulated Deficit	Total
	Shares	Amount
	('000	$’000	$’000	$’000	$’000
Balance at December 31, 2021	26,110	3	95,760	(71,370)	24,393
Cumulative effect of change in accounting principal	—	—	—	(15)	(15)
Cashless exercise of pre-funded warrants	2,410	—	—	—	—
Common stock compensation to board of directors	94	—	57	—	57
Common stock issued as compensation for services	30	—	16	—	16
Net loss	—	—	—	(1,886)	(1,886)
Balance at March 31, 2022	28,644	3	95,833	(73,271)	22,565
Balance at December 31, 2022	29,287	3	95,913	(79,355)	16,561
Common stock compensation to board of directors	31	—	28	—	28
Common stock issued as compensation for services	2,849	—	3,020	—	3,020
Stock-based compensation - options	—	—	27	—	27
Net loss	—	—	—	(1,066)	(1,066)
Balance at March 31, 2023	32,167	3	98,988	(80,421)	18,570

See Accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited)

6

Muscle Maker, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,
	2023	2022
	$’000	$’000
Cash Flows from Operating Activities
Net loss	(1,066)	(1,886)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	633	476
Stock-based compensation	55	72
Gain on extinguishments of debt	—	(140)
Stock-based consulting expenses	3,359	—
Change in fair value of compensation	541	—
Loss on disposal of assets	—	240
Bad debt expense	(5)	(9)
Changes in operating assets and liabilities:
Accounts receivable, net	(4,821)	(175)
Inventory	(34,848)	(1)
Prepaid expenses and other current assets	111	698
Security deposits and other assets	—	16
Accounts payable and accrued expenses	33,910	(404)
Accrued stock-based compensation expense - related party	(1,082)	—
Deferred rent	—	(128)
Operating right of use asset and liability, net	(30)	129
Deferred revenue	(53)	191
Other current liabilities	14	(8)
Total adjustments	(2,216)	957
Net cash used in operating activities	(3,282)	(929)
Cash Flows from Investing Activities
Deposit on farmland	(87)	—
Purchases of property and equipment	(109)	(35)
Net cash used in investing activities	(196)	(35)
Cash Flows from Financing Activities
Repayments of notes payables	(34)	(32)
Net cash used in financing activities	(34)	(32)
Net Decrease in Cash	(3,512)	(996)
Cash – beginning of period	9,898	15,767
Cash – end of period	6,386	14,771

See Accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited)

7

Muscle Maker, Inc.

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited)

	Three Months Ended March 31,
	2023	2022
	$’000	$’000
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	3	24

See Accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited)

8

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

1.    Business Organization and Nature of Operations

Muscle Maker, Inc. (“MMI”), a Nevada corporation was incorporated in Nevada on October 25, 2019. MMI was a wholly owned subsidiary of Muscle Maker, Inc (“MMI-Cal”), a California corporation incorporated on December 8, 2014, but the two merged on November 13, 2019, with MMI as the surviving entity. MMI wholly owns Muscle Maker Development, LLC (“MMD”), Muscle Maker Corp, LLC (“MMC”) and Muscle Maker USA, Inc (“Muscle USA”). MMD was formed on July 18, 2017, in the State of Nevada for the purpose of running our existing franchise operations and continuing to franchise the Muscle Maker Grill name and business system to qualified franchisees. MMC was formed on July 18, 2017, in the State of Nevada for the purpose of developing new corporate stores and operating new and existing corporate stores of MMI. Muscle USA was formed on March 14, 2019, in the State of Texas for the purpose of opening additional new corporate stores. Muscle Maker Development International LLC, a directly wholly owned subsidiary of MMI, which was formed in Nevada on November 13, 2020, to franchise the Muscle Maker Grill® name, trademarks and business system to qualified franchisees internationally. On March 25, 2021, MMI acquired the assets and trademarks of SuperFit Foods™, a subscription based fresh-prepared meal prep business located in Jacksonville, Florida. On May 14, 2021, MMI acquired the assets and trademarks of PKM Stamford, LLC, Poke Co., LLC, LB Holdings LLC, TNB Holdings, LLC, Poke Co Holdings LLC, GLL Enterprises, LLC, and TNB Holdings II, LLC, each a Connecticut limited liability company, an operator and franchisor of a fast casual restaurant chain concept, collectively known as “Pokémoto®.” On October 19, 2022, MMI formed Sadot LLC, a Delaware limited liability company and a wholly-owned subsidiary of MMI, ("Sadot"), for the purpose of shipping and trading agri-commodities on a global basis.

With the formation of Sadot in late 2022, MMI has evolved from a U.S.-centric restaurant business into a global, food-focused organization. As of March 31, 2023, MMI consisted of two distinct operating units:

1.SADOT LLC: MMI’s largest operating unit is a global agri-commodities company engaged in trading and shipping of food and feed (e.g., soybean meal, wheat, corn, etc.) via dry bulk cargo ships to/from markets such as Brazil, Canada, China, India, Japan, Malaysia, Philippines, Poland, Romania, Ukraine and Vietnam. Sadot competes with the ABCD commodity companies (ADM, Bunge, Cargill, Louis-Dreyfus) as well as many regional organizations. Sadot seeks to diversify over time into a sustainable and forward-looking global agri-foods company.

2.MMI RESTAURANT GROUP: This is MMI’s legacy business with two fast casual restaurant concepts, Pokémoto Hawaiian Poké® and Muscle Maker Grill®, plus a fresh-prep meal service, SuperFit Foods™, with 30+ points of distribution plus in-home and national delivery. As of March 31, 2023, the MMI Restaurant Group included 19 company-owned restaurants, including the SuperFit Foods™ kitchen, and 26 franchise restaurants. The MMI Restaurant Group seeks to develop Pokémoto® into a national restaurant brand through franchising.

MMI and its subsidiaries are hereinafter referred to as the “Company”.

Liquidity

Our primary source of liquidity is cash on hand. As of March 31, 2023, the Company had a cash balance, a working capital surplus and an accumulated deficit of $6.4 million, $6.4 million, and $80.4 million, respectively. During the three months ended March 31, 2023, the Company incurred a Pre-tax net loss of $1.1 million and Net cash used in operations of $3.3 million. The Company believes that our existing cash on hand and future cash flows from our franchise operations, will be sufficient to fund our operations, anticipated capital expenditures and repayment obligations over the next 12 months.

2.    Significant Accounting Policies

Basis of Presentation

The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation

9

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

of the Unaudited Condensed Consolidated Financial Statements of the Company as of March 31, 2023, and for the three months ended March 31, 2023, and 2022. The results of operations for the three months ended March 31, 2023, and 2022 are not necessarily indicative of the operating results for the full year. It is suggested that these Unaudited Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2022. The Balance Sheet as of December 31, 2022, has been derived from the Company’s audited Financial Statements.

Principles of Consolidation

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and majority-owned subsidiary. Any intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

Certain prior period balances have been reclassified in order to conform to current period presentation. These reclassifications have no effect on the previously reported results of operations or loss per share.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant estimates include:

•the assessment of recoverability of long-lived assets, including property and equipment, goodwill and intangible assets;

•the estimated useful lives of intangible and depreciable assets;

•estimates and assumptions used to value warrants and options;

•the recognition of revenue; and

•the recognition, measurement and valuation of current and deferred income taxes.

Estimates and assumptions are periodically reviewed, and the effects of any material revisions are reflected in the financial statements in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions.

Cash and Cash Equivalents

The Company considers all highly-liquid instruments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of March 31, 2023 or December 31, 2022.

Inventory

Inventories, which are stated at the lower of cost or net realizable value, consist primarily of commodity trade shipments in-transit, perishable food items and supplies. Cost is determined using the first-in, first-out method.

Deposit on Farmland

Deposit on farmland consists of funds paid as a deposit with the intent to acquire farmland in Africa by our Sadot subsidiary. As of March 31, 2023, the Company recorded a deposit of $5.0 million. The Company has entered into a letter of intent with a deposit to purchase undeveloped farmland. The Company is still in final negotiations with the intent to finalize the agreement by the end of the second quarter of 2023.

10

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Property and Equipment

Property and equipment are stated at cost less accumulated Depreciation and amortization expenses. Major improvements are capitalized, and minor replacements, maintenance and repairs are charged to expense as incurred. Depreciation and amortization expenses are calculated on the straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful life or the lease term of the related asset. The estimated useful lives are as follows:

Furniture and equipment	3 – 7 years
Leasehold improvements	1 – 11 years

Intangible Assets

The Company accounts for recorded intangible assets in accordance with the Accounting Standards Codification (“ASC’) 350 “Intangibles – Goodwill and Other”. In accordance with ASC 350, the Company does not amortize intangible assets having indefinite useful lives. The Company determined that as of January 1, 2022, – the trademark – Muscle Maker had a finite life of 3 years and is amortizing the value over the new estimated life. The Company’s goodwill has an indefinite life and is not amortized, but are evaluated for impairment at least annually, or more often whenever changes in facts and circumstances may indicate that the carrying value may not be recoverable. ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment). Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment.

The useful lives of the Company’s intangible assets are:

Franchisee agreements	13 years
Franchise license	10 years
Trademarks	3 – 5 years
Domain name, Customer list and Proprietary recipes	3 – 7 years
Non-compete agreements	2 – 3 years

Impairment of Long-Lived Assets

When circumstances, such as adverse market conditions, indicate that the carrying value of a long-lived asset may be impaired, the Company performs an analysis to review the recoverability of the asset’s carrying value, which includes estimating the undiscounted cash flows (excluding interest charges) from the expected future operations of the asset. These estimates consider factors such as expected future operating income, operating trends and prospects, as well as the effects of demand, competition and other factors. If the analysis indicates that the carrying value is not recoverable from future cash flows, an impairment loss is recognized to the extent that the carrying value exceeds the estimated fair value. Any impairment losses are recorded as operating expenses, which reduce net income.

Convertible Instruments

The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the Financial Accounting Standards Board (“FASB”).

If the instrument is determined not to be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the market price of the Company’s common stock as of the commitment date to the effective conversion price of the instrument.

11

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

As of March 31, 2023 and December 31, 2022, the Company deemed the conversion feature was not required to be bifurcated and recorded as a derivative liability.

Related Parties

A party is considered to be related to the Company if the party directly, indirectly, or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Revenue Recognition

The Company’s revenues consist of Commodity sales, Restaurant sales, Franchise royalties and fees, Franchise advertising fund contributions, and Other revenues. The Company recognizes revenues according to Topic 606 of FASB, “Revenue from Contracts with Customers”. Under the guidance, revenue is recognized in accordance with a five-step revenue model, as follows: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when (or as) the entity satisfies a performance obligation. In applying this five-step model, we made significant judgments in identifying the promised goods or services in our contracts with franchisees that are distinct, and which represent separate performance obligations.

Commodity Sales

Commodity sale revenue is generated by our Sadot subsidiary and is recognized when the commodity is delivered as evidenced by the bill of lading and the invoice is prepared and submitted to the customer. During the three months ended March 31, 2023, the Company recorded Commodity sales revenues of $210.4 million. The Company did not have any Commodity sales revenue during the three months ended March 31, 2022.

Restaurant Sales

Retail store revenue at Company-operated restaurants is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales-related taxes. The Company recorded retail store revenues of $2.3 million and $2.7 million during the three months ended March 31, 2023 and 2022, respectively.

The Company sells gift cards which do not have an expiration date, and it does not deduct dormancy fees from outstanding gift card balances. The Company recognizes revenues from gift cards as restaurant revenues once the Company performs its obligation to provide food and beverage to the customer simultaneously with the redemption of the gift card or through gift card breakage, as discussed in Other revenues below.

Franchise Royalties and Fees

Franchise revenues consists of royalties, initial franchise fees and rebates. Royalties are based on a percentage of franchisee net sales revenue. The Company recognizes the royalties as the underlying sales occur. The Company recorded revenue from royalties of $0.2 million and $0.1 million during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company provides the franchisees with management expertise, training, pre-opening assistance, and restaurant operating assistance in exchange for the multi-unit development fees and initial franchise fees. The Company capitalizes these fees upon collection from the franchisee. These initial fees are then recognized as franchise fee revenue on a straight-

12

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

line basis over the life of the related franchise agreements and any exercised renewal periods. Cash payments are due upon the execution of the related franchise agreement. The Company’s performance obligation with respect to franchise fee revenues consists of a license to utilize the Company’s brand for a specified period of time, which is satisfied equally over the life of each franchise agreement. If a franchise location closes or a franchise agreement is terminated for any reason, the unrecognized revenue will be recognized in full at that time. The Company recorded revenue from initial franchise fees of $0.1 million and $49.0 thousand during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company has supply agreements with certain food and beverage vendors. Pursuant to the terms of these agreements, rebates are provided to the Company based upon the dollar volume of purchases for all company-owned and franchised restaurants from these vendors. Rebates earned on purchases by franchise stores are recorded as revenue during the period in which the related food and beverage purchases are made. The Company recorded revenue from rebates of $26.0 thousand and $0.1 million during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations. Rebates earned on purchases by Company-owned stores are recorded as a reduction of Food and beverage costs during the period in which the related food and beverage purchases are made.

Franchise Advertising Fund Contributions

Under the Company’s franchise agreements, the Company and its franchisees are required to contribute a certain percentage of revenues to a national advertising fund. The Company’s national advertising services are provided on a system-wide basis and therefore, not considered distinct performance obligations for individual franchisees. In accordance with Topic 606, the Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense. The Company records the related advertising expenses as incurred under Sales, general and administrative expenses. When an advertising contribution fund is over-spent at year-end, advertising expenses will be reported on the Unaudited Condensed Consolidated Statement of Operations in an amount that is greater than the revenue recorded for advertising contributions. Conversely, when an advertising contribution fund is under-spent at a period-end, the Company will accrue advertising costs up to advertising contributions recorded in revenue. The Company recorded contributions from franchisees of $16.0 thousand and $18.0 thousand, respectively, during the three months ended March 31, 2023 and 2022, which are included in Franchise advertising fund contributions on the accompanying Unaudited Condensed Consolidated Statements of Operations.

Other Revenues

Gift card breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote and the Company determines there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction. The determination of the gift card breakage rate is based upon the Company’s specific historical redemption patterns. Gift card liability is recorded in other current liabilities on the Unaudited Condensed Consolidated Balance Sheets.

Deferred Revenue

Deferred revenue primarily includes initial franchise fees received by the Company, which are being amortized over the life of the Company’s franchise agreements. Deferred revenue is recognized in income over the life of the franchise agreements. If a franchise location closes or a franchise agreement is terminated for any reason, the remaining deferred revenue will be recognized in full at that time.

Stock-Based Consulting Expense

Stock-based consulting expenses are for consulting fees due to Aggia related to ongoing Sadot operations and expansion of the global agri-commodities business. Based on the servicing agreement with Aggia LLC FZ, a Company formed under the laws of United Arab Emirates (“Aggia”), the consulting fees are calculated at approximately 80.0% of the Net Income generated by the Sadot business segment. For the three months ended March 31, 2023, $3.4 million is recorded as Stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Statements of Operations and a corresponding liability is recorded as Accrued stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Balance Sheets. This expense is expected to be paid in stock in 2023.

13

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Advertising

Advertising costs are charged to expense as incurred. Advertising costs were $0.1 million and $33.0 thousand for the three months ended March 31, 2023 and 2022, respectively, are included in Sales, general and administrative expenses and $40.0 thousand and $0.1 million, respectively, are included in Other restaurant operating expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations.

Net Loss per Share

Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of potential common shares, if dilutive, resulting from the exercise of warrants, options or the conversion of convertible notes payable.

The following securities are excluded from the calculation of weighted average diluted common shares at March 31, 2023 and 2022, respectively, because their inclusion would have been anti-dilutive:

	March 31,
	2023	2022
	('000	('000
Warrants	18,034	17,874
Options	1,013	100
Convertible debt	24	32
Total potentially dilutive shares	19,071	18,006

Major Vendor

The Company engages various vendors to purchase commodities for resale and distribute food products to their Company-owned restaurants. Purchases from the Company’s three largest commodity suppliers totaled 98% of the Company’s purchases for the three months ended March 31, 2023. Purchases from the Company’s largest food products supplier totaled 45% of the Company’s purchases for the three months ended March 31, 2022.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of the FASB Accounting ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”).

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities.

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The carrying amounts of accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying amounts of our short–term credit obligations approximate fair value because the effective yields on these

14

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of common stock and warrants, are comparable to rates of returns for instruments of similar credit risk.

See Note 17 – Equity for details related to accrued compensation liability being fair valued using Level 1 inputs.

Income Taxes

The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Tax benefits claimed or expected to be claimed on a tax return are recorded in the Company’s financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Uncertain tax positions have had no impact on the Company’s financial condition, results of operations or cash flows. The Company does not expect any significant changes in its unrecognized tax benefits within years of the reporting date.

The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as Sales, general and administrative expenses in the Unaudited Condensed Consolidated Statements of Operations.

Stock-Based Compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally recorded on the grant date and re-measured on financial reporting dates and vesting dates until the service period is complete. The fair value amount of the award is then recognized over the period services are required to be provided in exchange for the award, usually the vesting period.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires companies to recognize lease liabilities and corresponding right-of-use leased assets on the Balance Sheets and to disclose key information about leasing arrangements. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2021, with early adoption permitted.

Additionally, in 2018 and 2019, the FASB issued the following Topic 842–related ASUs:

•ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, which clarifies the applicability of Topic 842 to land easements and provides an optional transition practical expedient for existing land easements;

•ASU 2018-10, Codification Improvements to Topic 842, Leases, which makes certain technical corrections to Topic 842;

•ASU 2018-11, Leases (Topic 842): Targeted Improvements, which allows companies to adopt Topic 842 without revising comparative period reporting or disclosures and provides an optional practical expedient to lessors to not separate lease and non-lease components of a contract if certain criteria are met; and

15

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

•ASU 2019-01, Leases (Topic 842): Codification Improvements, which provides guidance for certain lessors on determining the fair value of an underlying asset in a lease and on the cash flow statement presentation of lease payments received; ASU No. 2019-01 also clarifies disclosures required in interim periods after adoption of ASU No. 2016-02 in the year of adoption.

The Company adopted Topic 842 as of January 1, 2022 and recognized a cumulative-effect adjustment to the opening balance of accumulated deficit of $15.0 thousand as of the adoption date, and recognized an additional $7.8 thousand during the second quarter of 2022, based on updated information on two of our leases, for an aggregate cumulative-effect adjustment to accumulated deficit of $22.8 thousand. See Note 11 – Leases for further details.

In October 2021, the FASB issued ASU 2021-08 Business Combinations (“Topic 805”): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers”, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The adoption of this guidance did not have a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements and related disclosures.

Subsequent Events

The Company evaluated events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation and transactions, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Financial Statements, except as disclosed in Note 19 – Subsequent events.

3.    Loans Receivable

The Company had no loan receivable balance at March 31, 2023 and December 31, 2022. Loans receivable include loans to franchisees totaling, in the aggregate, net of reserves for uncollectible loans. There were no reserves for uncollectible loans at March 31, 2023 and $0.1 million at March 31, 2022. Loans receivable were paid in full during the third quarter of 2022 and the corresponding reserve for loan loss was reversed.

4.    Prepaid Expenses and Other Current Assets

At March 31, 2023 and December 31, 2022, the Company’s prepaid expenses and other current assets consists of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Prepaid expenses	189	89
Other receivables	17	228
Prepaid and Other Current Assets	206	317

Included in prepaid and other current assets is a receivable of $17.0 thousand and $0.2 million as of March 31, 2023 and December 31, 2022, respectively. The receivable reduced Labor expense for 2021 included in Restaurant operating expenses, related to the employee retention tax credits receivable from the Internal Revenue Services (“IRS”) that was made available to companies effected by COVID-19. The Company started to early access the credit in the fourth quarter of 2021 as allowed by the IRS.

5.    Deposit On Farmland

At December 31, 2022, the Company's deposit on farmland balance was $4.9 million. At March 31, 2023, the Company gave an additional $0.1 million deposit, totaling $5.0 million deposit on farmland balance. Deposit on farmland consists of

16

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

funds paid as a deposit with the intent to acquire farmland in Africa by our Sadot subsidiary. The Company has entered into a letter of intent with a deposit to purchase undeveloped farmland. The Company is still in final negotiations with the intent to finalize the agreement by the end of the second quarter of 2023.

6.    Property and Equipment, Net

As of March 31, 2023 and December 31, 2022, Property and equipment consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Furniture and equipment	1,312	1,266
Vehicles	55	55
Leasehold improvements	2,102	2,062
Construction in process	27	5
Property and equipment, gross	3,496	3,388
Less: accumulated depreciation	(1,816)	(1,493)
Property and equipment, net	1,680	1,895

Depreciation expense amounted to $0.3 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023 there were no write off's related to Property and equipment. For the three months ended March 31, 2022, the Company wrote off Property and equipment with an original cost value of $0.4 million, related to closed locations and future locations that were terminated due to the economic environment as a result of COVID-19 and increased Labor and Food cost and recorded a loss on disposal of $0.2 million, after accumulated depreciation of $0.1 million, in the Unaudited Condensed Consolidated Statement of Operations.

7.    Goodwill and Other Intangible Assets, Net

The Company’s intangible assets include trademarks, franchisee agreements, franchise license, domain names, customer list, proprietary recipes and non-compete agreements. Intangible assets are amortized over useful lives ranging from 2 to 13 years.

17

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

A summary of the intangible assets is presented below:

	Intangible assets, net at December 31, 2021	Impairment of intangible assets	Amortization expense	Intangible assets, net at March 31, 2022	Intangible assets, net at December 31, 2022	Impairment of intangible assets	Amortization expense	Intangible assets, net at March 31, 2023
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Trademark Muscle Maker Grill	1,526	—	(125)	1,401	670	—	(83)	587
Franchise Agreements Muscle Maker Grill	162	—	(6)	156	136	—	(7)	129
Trademark SuperFit	38	—	(2)	36	29	—	(2)	27
Domain Name SuperFit	106	—	(6)	100	81	—	(6)	75
Customer List SuperFit	118	—	(7)	111	90	—	(7)	83
Proprietary Recipes SuperFit	135	—	(8)	127	103	—	(8)	95
Non-Compete Agreement SuperFit	193	—	(21)	172	107	—	(21)	86
Trademark Pokemoto	153	—	(9)	144	118	—	(9)	109
Franchisee License Pokemoto	2,599	—	(68)	2,531	2,322	—	(68)	2,254
Proprietary Recipes Pokemoto	1,028	—	(40)	988	867	—	(40)	827
Non-Compete Agreement Pokemoto	328	—	(59)	269	88	—	(59)	29
	6,386	—	(351)	6,035	4,611	—	(310)	4,301

Amortization expense related to intangible assets was $0.3 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively.

18

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The estimated future amortization expense is as follows:

	Three Months Ended March 31,
	2024	2025	2026	2027	2028	Thereafter	Total
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Trademark Muscle Maker Grill	252	335	—	—	—	—	587
Franchise Agreements Muscle Maker Grill	20	27	27	27	27	1	129
Trademark SuperFit	7	9	9	2	—	—	27
Domain Name SuperFit	19	25	25	6	—	—	75
Customer List SuperFit	21	28	28	6	—	—	83
Proprietary Recipes SuperFit	24	32	32	7	—	—	95
Non-Compete Agreement SuperFit	65	21	—	—	—	—	86
Trademark Pokemoto	26	35	35	13	—	—	109
Franchisee License Pokemoto	209	278	277	277	277	936	2,254
Proprietary Recipes Pokemoto	122	162	161	161	161	60	827
Non-Compete Agreement Pokemoto	29	—	—	—	—	—	29
	794	952	594	499	465	997	4,301

The Company determined that no impairment testing of the Company’s intangible assets was required as of March 31, 2023. Therefore, no impairment charge was recorded.

A summary of the goodwill assets is presented below:

	Muscle Maker Grill	Pokemoto	SuperFit Food	Total
	$’000	$’000	$’000	$’000
Goodwill, net at December 31 2021	570	1,798	258	2,626
Impairment of goodwill	—	—	—	—
Goodwill, net at March 31, 2022	570	1,798	258	2,626
Goodwill, net at December 31 2022	570	1,798	258	2,626
Impairment of goodwill	—	—	—	—
Goodwill, net at March 31, 2023	570	1,798	258	2,626

The Company determined that no impairment testing of the Company’s goodwill was required as of March 31, 2023. Therefore, no impairment charge was recorded.

19

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

8.    Accounts Payables and Accrued Expenses

Accounts payables and accrued expenses consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Accounts payable	699	1,085
Accrued payroll and bonuses	102	551
Accrued expenses	102	87
Accrued professional fees	73	185
Accounts payable commodities	34,830	—
Sales taxes payable (1)	57	45
	35,863	1,953

(1)See Note 15 – Commitments and contingencies for details related to delinquent sales taxes.

9.    Accrued Stock-Based Consulting Expenses Due to Related Party

At March 31, 2023, Accrued stock-based consulting expenses due to related party was $3.4 million. At December 31, 2022, Accrued stock-based consulting expenses was $3.6 million. Accrued stock-based consulting expenses are related to consulting fees due to our newly established related party, Aggia, for Sadot operations. See Note 18 – Related party transactions for details. Based on the servicing agreement with Aggia, the consulting fees are calculated at approximately 80.0% of the Net income generated by the Sadot business segment. For the three months ended March 31, 2023, $3.4 million are also recorded as Stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Statements of Operations. The Stock-based consulting expense that is due to related party is expected to be paid in stock in 2023.

10.    Notes Payable

Convertible Notes Payable

On April 6, 2018, the Company issued a $0.5 million convertible promissory note (the “2018 ARH Note”) to the Former Parent for services rendered and expense paid on behalf of the Company. The 2018 ARH Note has no stated interest rate or maturity date and is convertible into shares of the Company’s common stock at a conversion price of $3.50 per share at a time to be determined by the lender.

On April 11, 2018, the Former Parent elected to partially convert the 2018 ARH Note for the principal of $0.4 million into 0.1 million shares of the Company’s common stock.

The Company had an aggregate gross amount of $0.1 million and $0.1 million of convertible notes payable as of March 31, 2023 and December 31, 2022 included in notes payable on the Unaudited Condensed Consolidated Balance Sheets.

Other Notes Payable

During the three months ended March 31, 2023 and 2022, the Company repaid a total amount of $0.1 million and $1.3 million, respectively, of the other notes payable.

As of March 31, 2023, the Company had an aggregate amount of $0.9 million in other notes payable. The notes had interest rates ranging between 3.75% - 8.00% per annum, due on various dates through May 2027.

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Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The maturities of notes payable as of March 31, 2023, are as follows:

	Principal Amount
	$’000
2023	225
2024	121
2025	70
2026	531
Thereafter	—
	947

11.    Leases

The Company’s leases consist of restaurant locations. We determine if a contract contains a lease at inception. The leases generally have remaining terms of 1-10 years and most leases included the option to extend the lease for an additional 5 years.

The total lease cost associated with right of use assets and operating lease liabilities for the three months ended March 31, 2023, was $0.1 million and has been recorded in the Unaudited Condensed Consolidated Statement of Operations as Rent expense within Restaurant operating expenses.

The assets and liabilities related to the Company’s leases were as follows:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Assets
Right to use asset	2,189	2,433
Liabilities
Operating leases – current	505	560
Operating leases – non-current	1,800	2,019
Total lease liabilities	2,305	2,579

21

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The table below presents the future minimum lease payments under the noncancellable operating leases as of March 31, 2023:

	Operating Leases
	$’000
Fiscal Year:
2023	565
2024	706
2025	556
2026	386
2027	300
2028	222
Thereafter	368
Total lease payments	3,103
Less imputed interest	(798)
Present value of lease liabilities	2,305

The Company’s lease term and discount rates were as follows:

	As of March 31, 2023
Weighted-average remaining lease term (in years)
Operating leases	5.01
Weighted-average discount rate
Operating leases	12.0	%

12.    Deferred Revenue

The Company's deferred revenue consists of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Deferred revenues, net	1,318	1,371
Less: deferred revenue, current	(90)	(95)
Deferred revenues, non-current	1,228	1,276

22

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

13.    Other Current Liabilities

Other current liabilities consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Gift card liability	26	25
Co-op advertising fund liability	87	79
Marketing development brand liability	41	35
Advertising fund liability	41	43
	195	182

See Note 2 – Significant accounting policies for details related to the gift card liability and advertising fund liability.

14.    Income Taxes

The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of March 31, 2023 and December 31, 2022 are presented below:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Deferred tax assets:
Net operating loss carryforwards	10,693	10,615
Receivable allowance	6	5
Stock-based compensation	313	15
Intangible assets	38	314
Deferred revenues	273	204
Leases	25	32
Gross deferred tax asset	11,348	11,185
Deferred tax liabilities:
Property and equipment	(103)	(160)
Gross deferred tax liabilities	(103)	(160)
Net deferred tax assets	11,246	11,025
Valuation allowance	(11,246)	(11,025)
Net deferred tax asset, net of valuation allowance	—	—

23

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The income tax expense for the periods shown consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Federal:
Current	—	—
Deferred	—	—
State and local:
Current	3	25
Deferred	—	—
	3	25
Change in valuation allowance	—	—
Income tax expense	3	25

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the periods shown, are as follows:

	As of
	March 31, 2023		December 31, 2022
Federal income tax benefit at statutory rate	21.0	%	21.0	%
State income tax benefit, net of federal impact	(0.2)	%	(0.5)	%
Permanent differences	(1.9)	%	(0.1)	%
PPP loan forgiveness	—	%	0.4	%
Return to provision adjustments	—	%	3.3	%
Deferred tax asset true up- State	—	%	(14.5)	%
Deferred tax asset true up- Federal	—	%	(6.8)	%
Other	0.1	%	—	%
Change in valuation allowance	(20.7)	%	(3.3)	%
Effective income tax rate	(1.7)	%	(0.5)	%

The Company has filing obligations in what it considers its U.S. major tax jurisdictions as follows: Nevada, California, Connecticut, Florida, New Jersey, Texas, Virginia, New York State and New York City. The earliest year that the Company is subject to examination is the year ended December 31, 2015.

The Company has approximately $63.6 million of Federal and State Net operating loss (“NOLs”) available to offset future taxable income. The net operating loss carryforwards generated prior to 2018, if not utilized, will expire from 2035 to 2037 for federal and state purposes.

As of March 31, 2023 and December 31, 2022, the Company has determined that it is more likely than not that the Company will not recognize the future tax benefit of the loss carryforwards and has recognized a valuation allowance of $11.2 million and $11.0 million, respectively. The valuation allowance increased by approximately $0.2 million.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. Generally, in addition to certain entity reorganizations, the limitation applies when one or more “5 percent stockholders” increase their ownership, in the aggregate, by more than 50 percentage points over a 36-month time period testing period or beginning the day after the most recent ownership change, if shorter.

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Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

15.    Commitments and Contingencies

Consulting Agreements

On November 14, 2022 (the “Effective Date”), the Company, Sadot and Aggia entered into a Services Agreement (the “Services Agreement”) whereby Sadot engaged Aggia to provide certain advisory services to Sadot for creating, acquiring and managing Sadot’s business of wholesaling food and engaging in the purchase and sale of physical food commodities.

As consideration for Aggia providing the services to Sadot, the Company agreed to issue shares of common stock of the Company, par value $0.0001 per share, to Aggia subject to Sadot generating net income measured on a quarterly basis at per share price of $1.5625, subject to equitable adjustments for any combinations or splits of the common stock occurring following the Effective Date. Upon Sadot generating net income for any fiscal quarter, the Company shall issue Aggia a number of shares of common stock equal to the net income for such fiscal quarter divided by the per share price (the “Shares”). The Company may only issue authorized, unreserved shares of common stock. The Company will not issue Aggia in excess of 14.4 million shares representing 49.9% of the number of issued and outstanding shares of common stock as of the Effective Date. Further, once Aggia has been issued a number of shares constituting 19.99% of the issued and outstanding shares of common stock of the Company, no additional shares shall be issued to Aggia unless and until this transaction has been approved by the shareholders of the Company. The shareholders approved the Services Agreement on February 28, 2023. In the event that the shares cap has been reached, then the remaining portion of the net income, if any, not issued as shares shall accrue as debt payable by Sadot to Aggia until such debt has reached a maximum of $71.5 million. The Company will prepare the shares earned calculation after the annual audit or quarter review is completed by the auditors. The shares will be issued within 10 days of the final calculation.

Additionally, for the three months ended March 31, 2023, the Company reimbursed Aggia for all operating costs related to Sadot including labor, operating and general administrative expenses of $0.6 million, $0.2 million and $0.1 million, respectively.

Franchising

During the three months ended March 31, 2023 and 2022, the Company entered into various Pokemoto franchise agreements for a total of 5 and 11, respectively, potentially new Pokemoto locations with various franchisees. The Franchisees paid the Company an aggregate of $0.1 million and $0.2 million and this has been recorded in deferred revenue as of March 31, 2023 and 2022, respectively.

Master Franchise Agreement

On October 25, 2021, Muscle Maker Development International LLC (“MMDI”), a wholly-owned subsidiary of Muscle Maker Inc., entered into a Master Franchise Agreement (the “Master Franchise Agreement”) with Almatrouk Catering Company – OPC (“ACC”) providing ACC with the right to grant franchises for the development of 40 “Muscle Maker Grill” restaurants through December 31, 2030 (the “Term”) in the Kingdom of Saudi Arabia (“KSA”).

Under the Master Franchise Agreement, MMDI has granted to ACC an exclusive right to establish and operate Muscle Maker restaurants in the KSA. MMDI will not own or operate restaurants in KSA, grant franchises for the restaurants in KSA, or grant Master Franchise Rights for the restaurants to other persons within the KSA. ACC will be solely responsible for the development, sales, marketing, operations, distribution and training of all franchise locations sold in the KSA.

ACC is required to pay MMDI $0.2 million pursuant to the Master Franchise Agreement upon the occurrence of various events. ACC is required to pay MMDI $20.0 thousand upon the execution of each franchise agreement for each individual restaurant and a monthly royalty fee of $1.0 thousand for each restaurant. Further, ACC is to adhere to the agreed upon development schedule as outlined in the master franchise agreement. An initial $20.0 thousand deposit was paid on the agreement and no other amount is due at this time. ACC has not performed against this agreement.

Taxes

The Company failed in certain instances in paying past state and local sales taxes collected from customers in specific states that impose a tax on sales of the Company’s products during 2017 and 2018. As of the second quarter 2022, all past

25

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

due tax on sales from 2017 and 2018 has been paid in full. The Company had accrued a sales tax liability for approximately $0.1 million and $44.6 thousand as of March 31, 2023, and December 31, 2022, respectively. All current state and local sales taxes from January 1, 2018, for open Company-owned locations have been fully paid and in a timely manner. The Company has completed all the payment plans with the various state or local entities for these past owed amounts.

Litigations, Claims and Assessments

On April 24, 2022, the Company and a convertible note holder entered into an agreement in which the Company will repay a total of $0.1 million in connection with the default judgement issued on June 22, 2018, by the Iowa District Court for Polk County #CVCV056029, filed against the Company for failure to pay the remaining balance due on a promissory note in the amount of $0.1 million, together with interest, attorney fees and other costs of $0.2 million. The Company agreed to pay $40.0 thousand on or before May 1, 2022 and to make seven installment payments of $10.0 thousand per month starting on or before June 1, 2022. As of December 30, 2022, the Company had paid this note in full.

On or about March 7, 2019, the Company was listed as a defendant to a lawsuit filed by a contractor in the State of Texas in El Paso County #2019DCV0824. The contractor is claiming a breach of contract and is seeking $33.0 thousand in damages for services claimed to be rendered by the contractor. The Company accrued $30.0 thousand for the liability in accounts payable and accrued expenses as of March 31, 2023 and December 31, 2022.

On January 23, 2020, the Company was served a judgment issued by the Judicial Council of California in the amount of $0.1 million for a breach of a lease agreement in Chicago, Illinois, in connection with a Company-owned store that was closed in 2018. As of March 31, 2023 and December 31, 2022, the Company has accrued for the liability in accounts payable and accrued expenses.

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. In the opinion of management after consulting legal counsel, such matters are currently not expected to have a material impact on the Company’s financial statements.

The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements after consulting legal counsel.

Employment Agreements

On November 16, 2022, , the Company entered into an Executive Employment Agreement with Michael Roper (the “Roper Agreement”), which replaced his prior employment agreement. Pursuant to the Roper Agreement, Mr. Roper will continue to be employed as Chief Executive Officer of the Company on an at-will-basis. During the term of the Roper Agreement, Mr. Roper is entitled to a base salary at the annualized rate of $0.4 million. Mr. Roper will be eligible for a discretionary performance bonus to be determined by the Board annually. Further, Mr. Roper will be entitled to an additional bonus of $0.1 million upon the Company obtaining approval of the Shareholder Matters and $25.0 thousand upon the Designated Directors representing a majority of the Board of Directors. If Mr. Roper is terminated for any reason, he will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to exercise any equity compensation rights through the last day of the term applicable to such stock option. If Mr. Roper is terminated by the Company for any reason other than cause or resigns for a good reason, Mr. Roper will be entitled to a severance payment equal to 36 months of salary, which will be reduced to 18 months following the second anniversary of the Roper Agreement, and all equity compensation shall be fully accelerated. In the event the Shareholder Matters are not approved by the shareholders, the Roper Agreement will automatically terminate and the prior employment agreement will again be in full effect.

On March 21, 2023, the Company entered into an Executive Employment Agreement with Jennifer Black (the “Black Agreement”), which replaced her prior employment agreement. Pursuant to the Black Agreement, Ms. Black will continue to be employed as Chief Financial Officer of the Company on an at-will-basis. During the term of the Black Agreement, Ms. Black is entitled to a base salary at the annualized rate of $0.2 million. Ms. Black will be eligible for a discretionary performance bonus up to 50% of her annual salary. Further, Ms. Black will be entitled to an additional bonus of $0.1 million upon the Company obtaining approval of the Shareholder Matters and $25.0 thousand upon the Designated Directors representing a majority of the Board of Directors. If Ms. Black is terminated for any reason, she will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to

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Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

exercise any equity compensation rights through the last day of the term applicable to such stock option. If Ms. Black is terminated by the Company for any reason other than cause or resigns for a good reason, Ms. Black will be entitled to a severance payment equal to 36 months of salary, which will be reduced to six months following the second anniversary of the Black Agreement, and all equity compensation shall be fully accelerated. In the event the Shareholder Matters are not approved by the shareholders, the Black Agreement will automatically terminate and the prior employment agreement will again be in full effect.

On November 16, 2022, the Company entered into an Executive Employment Agreement with Kenneth Miller (the “Miller Agreement”), which replaced his prior employment agreement. Pursuant to the Miller Agreement, Mr. Miller will continue to be employed as Chief Operating Officer of the Company on an at-will-basis. During the term of the Miller Agreement, Mr. Miller is entitled to a base salary at the annualized rate of $0.3 million. Mr. Miller will be eligible for a discretionary performance bonus up to 75% of his annual salary. Further, Mr. Miller will be entitled to an additional bonus of $25.0 thousand upon the Designated Directors representing a majority of the Board of Directors. If Mr. Miller is terminated for any reason, he will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to exercise any equity compensation rights through the last day of the term applicable to such stock option. If Mr. Miller is terminated by the Company for any reason other than cause or resigns for a good reason, Mr. Miller will be entitled to a severance payment equal to 36 months of salary, which will be reduced to 12 months following the second anniversary of the Miller Agreement, and all equity compensation shall be fully accelerated. In the event the Shareholder Matters are not approved by the shareholders, the Miller Agreement will automatically terminate and the prior employment agreement will again be in full effect.

On November 16, 2022, the Company entered into an Executive Employment Agreement with Kevin Mohan (the “Mohan Agreement”), which replaced his prior employment agreement. Pursuant to the Mohan Agreement, Mr. Mohan will continue to be employed as Chief Investment Officer of the Company on an at-will-basis. During the term of the Employment Agreement, Mr. Mohan is entitled to a base salary at the annualized rate of $0.2 million. Mr. Mohan will be eligible for a discretionary performance bonus up to 75% of his annual salary. Further, Mr. Mohan will be entitled to an additional bonus of $0.1 million upon the Company obtaining approval of the Shareholder Matters and $25.0 thousand upon the Designated Directors representing a majority of the Board of Directors. If Mr. Mohan is terminated for any reason, he will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to exercise any equity compensation rights through the last day of the term applicable to such stock option. If Mr. Mohan is terminated by the Company for any reason other than cause or resigns for a good reason, Mr. Mohan will be entitled to a severance payment equal to 36 months of salary, which will be reduced to six months following the second anniversary of the Mohan Agreement, and all equity compensation shall be fully accelerated. In the event the Shareholder Matters are not approved by the shareholders, the Mohan Agreement will automatically terminate and the prior employment agreement will again be in full effect.

On November 16, 2022, the Company entered into an Executive Employment Agreement with Aimee Infante (the “Infante Agreement”), which replaced her prior employment agreement. Pursuant to the Infante Agreement, Ms. Infante will continue to be employed as Chief Marketing Officer of the Company on an at-will-basis. During the term of the Infante Agreement, Ms. Infante is entitled to a base salary at the annualized rate of $0.2 million. Ms. Infante will be eligible for a discretionary performance bonus up to 25% of her annual salary. Further, Ms. Infante will be entitled to an additional bonus of $25.0 thousand upon the Designated Directors representing a majority of the Board of Directors. If Ms. Infante is terminated for any reason, she will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to exercise any equity compensation rights through the last day of the term applicable to such stock option. If Ms. Infante is terminated by the Company for any reason other than cause or resigns for a good reason, Ms. Infante will be entitled to a severance payment equal to 36 months of salary, which will be reduced to six months following the second anniversary of the Infante Agreement, and all equity compensation shall be fully accelerated. In the event the Shareholder Matters are not approved by the shareholders, the Infante Agreement will automatically terminate, and the prior employment agreement will again be in full effect.

27

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

16.    Reportable Operating Segments

See Note 1 – Business organization and nature of operations for descriptions of our operating segments.

The following table sets forth the results of operations for the relevant segments for the three months ended March 31, 2023:

	For the Three Months Ended March 31, 2023
	Restaurant division	Sadot division	Corporate adj.	Total segments
	$’000	$’000	$’000	$’000
Revenues:
Commodity sales	—	210,366	—	210,366
Company restaurant sales, net of discounts	2,301	—	—	2,301
Franchise royalties and fees	284	—	—	284
Franchise advertising fund contributions	16	—	—	16
Total revenues	2,601	210,366	—	212,967
Operating Costs and Expenses:
Commodity operating expenses:
Commodity cost	—	205,055	—	205,055
Labor	—	620	—	620
Other commodity operating expenses	—	154	—	154
Total commodity operating expenses	—	205,829	—	205,829
Restaurant operating expenses:
Food and beverage costs	839	—	—	839
Labor	880	—	—	880
Rent	274	—	—	274
Other restaurant operating expenses	472	—	—	472
Total restaurant operating expenses	2,465	—	—	2,465
Depreciation and amortization expenses	316	—	317	633
Franchise advertising fund expenses	16	—	—	16
Pre-opening expenses	36	—	—	36
Post-closing expenses	93	—	1	94
Stock-based consulting expenses	—	—	3,359	3,359
Sales, general and administrative expenses	82	286	1,774	2,142
Total costs and expenses	3,008	206,115	5,451	214,574
(Loss) / income from operations	(407)	4,251	(5,451)	(1,607)
Other Income:
Interest income / (expense), net	2	—	1	3
Change in fair value of accrued compensation	—	—	541	541
Total other income, net	2	—	542	544
(Loss) / Income Before Income Tax	(405)	4,251	(4,909)	(1,063)
Income tax	—	—	3	3
Net (loss) / income	(405)	4,251	(4,912)	(1,066)

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Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The following table sets forth the results of operations for the relevant segments for the three months ended March 31, 2022:

	For the Three Months Ended March 31, 2022
	Restaurant division	Sadot division	Corporate adj.	Total segments
	$’000	$’000	$’000	$’000
Revenues:
Company restaurant sales, net of discounts	2,694	—	—	2,694
Franchise royalties and fees	208	—	—	208
Franchise advertising fund contributions	18	—	—	18
Total revenues	2,920	—	—	2,920
Operating Costs and Expenses:
Restaurant operating expenses:
Food and beverage costs	1,026	—	—	1,026
Labor	1,073	—	—	1,073
Rent	340	—	—	340
Other restaurant operating expenses	650	—	—	650
Total restaurant operating expenses	3,089	—	—	3,089
Depreciation and amortization expenses	119	—	357	476
Franchise advertising fund expenses	18	—	—	18
Sales, general and administrative expenses	257	—	1,067	1,324
Total costs and expenses	3,483	—	1,424	4,907
Loss from operations	(563)	—	(1,424)	(1,987)
Other Income:
Other income / (expense)	2	—	(21)	(19)
Interest income / (expense), net	3	—	(21)	(18)
Gain on debt extinguishment	140	—	—	140
Total other income, net	145	—	(42)	103
Loss Before Income Tax	(418)	—	(1,466)	(1,884)
Income tax	—	—	2	2
Net loss	(418)	—	(1,468)	(1,886)

With the creation of our Sadot subsidiary in late 2022, we began to transform from a U.S.-centric restaurant business into a global, food-focused organization with two distinct segments. As a result, we have reevaluated and changed our operating segments during the three months ended March 31, 2023. Previously we split out Muscle Maker Grill, Pokemoto, and SuperFit Foods as their own restaurant operating segments. Since Sadot's operations is primarily in commodities trading and is such a large portion of the Companies business, the Company segregated it into its own segment and combined all restaurant operations into a segment.

The Company will continue to evaluate its operating segments and update as necessary.

17.    Equity

Stock Option and Stock Issuance Plan

2021 Plan

The Company’s board of directors and shareholders approved and adopted on October 7, 2021 the 2021 Equity Incentive Plan (“2021 Plan”), effective on September 16, 2020 under which stock options and restricted stock may be granted to

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Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

officers, directors, employees and consultants in the form of non-qualified stock options, incentive stock-options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. Under the 2021 Plan, the Company reserved 1.5 million shares of common stock for issuance. As of March 31, 2023, 1.2 million shares have been issued and 0.3 million options to purchase shares have been awarded under the 2021 Plan.

2023 Plan

The Company’s board of directors and shareholders approved and adopted on February 28, 2023 the 2023 Equity Incentive Plan (“2023 Plan”) under which stock options and restricted stock may be granted to officers, directors, employees and consultants in the form of non-qualified stock options, incentive stock-options, stock appreciation rights, restricted stock awards, restricted stock Units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. Under the 2023 Plan, the Company reserved 2.5 million shares of common stock for issuance. As of March 31, 2023 no shares have been issued and 68.9 thousand option to purchase shares have been awarded under the 2023 Plan.

Common Stock Issuances

On January 6, 2022, the Company authorized the issuance of an aggregate of 39.6 thousand shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2022. The Company accrued for the liability as of March 31, 2022.

On January 18, 2022, the Company issued an aggregate of 30.0 thousand shares of common stock of the Company to a consultant that assisted with the acquisition of SuperFit Foods and Pokemoto, with an aggregate fair value amount of $15.6 thousand. The Company accrued for the liability as of March 31, 2022.

On March 31, 2022, the Company authorized the issuance of an aggregate of 0.1 million shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2022.

On April 4, 2022, the Company authorized the issuance of 20.0 thousand shares of common stock to a member of the executive team per the employment agreement. The stock was not fully earned until April 4, 2022.

On June 8, 2022, the Company authorized the issuance of 5.0 thousand shares of common stock to a contractor for work done at a Company owned location.

On June 30, 2022, the Company recognized 30.9 thousand shares of common stock for book purpose to reconcile the shares outstanding to the transfer agent report.

On July 14, 2022, the Company authorized the issuance of an aggregate of 0.1 million shares of common stock to the members of the board of directors as compensation earned during the second quarter of 2022.

On October 12, 2022, the Company authorized the issuance of an aggregate of 0.1 million shares of common stock to the members of the board of directors as compensation earned during the third quarter of 2022.

On November 29, 2022, the Company authorized the issuance of an aggregate of 0.4 million shares of common stock in connection with the exercise of pre-funded warrants.

On January 5, 2023, the Company authorized the issuance of an aggregate of 31.3 thousand shares of common stock to the members of the board of directors as compensation earned during the fourth quarter of 2022.

On March 27, 2023, the Company authorized the issuance of 2.8 million shares of common stock to Aggia as consulting fees earned during the fourth quarter of 2022.

Change in fair vale of accrued compensation on the Unaudited Condensed Consolidated Statement of Operations is made up of the difference between the agreed upon issuance price, per the servicing agreement with Aggia and the market price

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Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

on the day of issuance. For three months ended March 31, 2023, Change in fair value of accrued compensation was $0.5 million.

Private Placements

On April 7, 2021, the Company entered into a Securities Purchase Agreement with an accredited investor (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) pursuant to which the investor agreed to purchase from the Company for an aggregate purchase price of approximately $10.0 million (i) 1.3 million shares of common stock of the Company (ii) a common stock purchase warrant to purchase up to 4.1 million shares of common stock (the “Common Warrant”) and (iii) a pre-funded common stock purchase warrant to purchase up to 2.9 million shares of common stock (the “pre-funded warrant”). Each share and accompanying common warrant is being sold together at a combined offering price of $2.43 per share and Common Warrant, and each pre-funded warrant and accompanying common warrant is being sold together at a combined offering price of $2.42 per pre-funded warrant and accompanying common warrant. The pre-funded warrant is immediately exercisable, at a nominal exercise price of $0.01 per share, and may be exercised at any time until the pre-funded warrant are fully exercised. The common warrant will have an exercise price of $2.43 per share, are immediately exercisable and will expire 5.5 years from the date of issuance. The Private Placement closed on April 9, 2021.

The Securities Purchase Agreement contains customary representations, warranties and agreements of the Company and the Purchaser and customary indemnification rights and obligations of the parties thereto. Pursuant to the Securities Purchase Agreement, the Company was required to register the resale of the shares and the shares issuable upon exercise of the common warrant and the pre-funded warrant. The Company prepared and filed a registration statement with the Securities and Exchange Commission within 30 days of the date of the Securities Purchase Agreement and to used commercially reasonable efforts to have the registration statement declared effective within 90 days of the closing of the Private Placement.

Pursuant to a placement agency agreement, dated April 6, 2021, between the Company and A.G.P./Alliance Global Partners (the “Placement Agent”) entered into in connection with the Private Offering, the Placement Agent acted as the sole placement agent for the Private Placement and the Company has paid customary placement fees to the Placement Agent, including a cash fee equal to 8.0% of the gross proceeds raised in the Private Placement and a common stock purchase warrant to purchase shares of common stock in an amount equal to 4.0% of the Shares and shares of common stock issuable upon exercise of the warrants sold in the Private Placement, the warrant has an exercise price of $2.916 per share and is exercisable commencing six months from the date of the pricing of the Private Placement for a period of five years after such date. Pursuant to the Placement Agency Agreement, the Company has also agreed to reimburse certain expenses of the placement agent incurred in connection with the Private Placement.

On November 17, 2021, the Company entered into a Securities Purchase Agreement with accredited investors (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) pursuant to which the investors (the “Purchasers”) agreed to purchase from the Company for an aggregate purchase price of approximately $15.0 million (i) 6.8 million shares (the “Shares”) of common stock, par value $0.0001 per share, of the Company (the “common stock”) (ii) a common stock purchase warrant to purchase up to 10.8 million shares of common stock (the “common warrant”) and (iii) a pre-funded common stock purchase warrant to purchase up to 4.1 million shares of common stock (the “pre-funded warrant”). Each share and accompanying common warrant were being sold together at a combined offering price of $1.385 per share and common warrant, and each pre-funded warrant and accompanying Common Warrant is being sold together at a combined offering price of $1.3849 per pre-funded warrant and accompanying common warrant. The pre-funded warrant is immediately exercisable, at a nominal exercise price of $0.0001 per share, and may be exercised at any time until the pre-funded warrant is fully exercised. The common warrant will have an exercise price of $1.385 per share, are immediately exercisable and will expire 5 years from the date of issuance. The Private Placement closed on November 22, 2021.

The Securities Purchase Agreement contains customary representations, warranties and agreements of the Company and the Purchaser and customary indemnification rights and obligations of the parties thereto. Pursuant to the Securities Purchase Agreement, the Company is required to register the resale of the shares and the shares issuable upon exercise of the common warrant and the pre-funded warrant. The Company was required to prepare and file a registration statement with the Securities and Exchange Commission within 30 days of the date of the Securities Purchase Agreement and used

31

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

commercially reasonable efforts to have the registration statement declared effective within 90 days of the closing of the Private Placement.

Pursuant to a placement agency agreement, dated November 17, 2021, between the Company and A.G.P./Alliance Global Partners (the “Placement Agent”) entered into in connection with the Private Offering, the Placement Agent acted as the sole placement agent for the Private Placement and the Company has paid customary placement fees to the Placement Agent, including a cash fee equal to 8.0% of the gross proceeds raised in the Private Placement and a common stock purchase warrant to purchase shares of Common Stock in an amount equal to 4.0% of the Shares and shares of common stock issuable upon exercise of the warrants sold in the Private Placement, which warrant has an exercise price of $1.662 per share and is exercisable commencing six months from the date of the pricing of the Private Placement for a period of five years after such date. Pursuant to the Placement Agency Agreement, the Company has also agreed to reimburse certain expenses of the placement agent incurred in connection with the Private Placement. The warrants for the November 17, 2021, private placement for the Placement Agents were issued in the fourth quarter of 2022.

Warrant and Option Valuation

The Company has computed the fair value of warrants granted and options accrued for as accrued compensation expense using the Black-Scholes option pricing model. The expected term used for warrants and options issued to non-employees is the contractual life. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected term of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

Options

On February 27, 2023, the Company issued options to purchase an aggregate of 0.5 million shares of the Company's common stock to officers and directors. The options had an exercise price of $1.51 per share and vest ratably over 20 quarters with the first vesting occurring March 31, 2023.

On March 15, 2023, the Company issued options to purchase 0.1 million shares of the Company's common stock. The options had an exercise price of $1.51 per share and vest ratably over 20 quarters with the first vesting occurring March 31, 2023.

A summary of option activity during the three months ended March 31, 2023 and 2022 is presented below:

	Weighted-average exercise price	Number of options	Weighted-average remaining life (in years)	Aggregate intrinsic value
	$			$’000
Outstanding, December 31, 2021	5.00	100,000	1.90	—
Issued	—	—	N/A	—
Exercised	—	—	N/A	—
Forfeited	—	—	N/A	—
Outstanding, March 31, 2022	5.00	100,000	1.66	—
Exercisable, March 31, 2022	5.00	100,000	1.66	—
Outstanding, December 31, 2022	1.52	412,500	3.56	156
Issued	1.51	600,000	6.17	—
Exercised	—	—	N/A	—
Forfeited	—	—	N/A	—
Outstanding, March 31, 2023	1.52	1,212,500	5.00	206
Exercisable, March 31, 2023	3.00	190,019	1.51	40

32

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The Company has estimated the fair value of the options using the Black-Scholes model using the following assumptions:

	Three Months Ended March 31, 2023
Risk free interest rate	1.53-4.33%
Expected term (years)	5
Expected volatility	59.10-156.87%
Expected dividends	—

Warrants

On January 3, 2022, the Company issued 1.2 million shares of common stock in connection with the cashless exercise of the pre-funded warrants. Pursuant to the terms of the pre-funded warrants a total of 1.2 million warrants were exercised.

On February 24, 2022, the Company issued 1.2 million shares of common stock in connection with the cashless exercise of the pre-funded warrants. Pursuant to the terms of the pre-funded warrants a total of 1.2 million warrants were exercised.

On November 29, 2022, the Company issued 0.4 million shares of common stock in connection with the exercising of pre-funded warrants for $44.

A summary of warrants activity during the three months ended March 31, 2023 and 2022 is presented below:

	Number of Warrants	Weighted-average exercise price		Weighted-average remaining life (in years)
Outstanding, December 31, 2021	20,284,016	$	1.60	4.00
Issued	—	—		N/A
Exercised	(2,410,110)	—		N/A
Forfeited	—	—		N/A
Outstanding, March 31, 2022	17,873,906	$	1.90	4.30
Exercisable, March 31, 2022	17,873,906	$	1.90	4.30
Outstanding, December 31, 2022	18,033,640	$	1.93	3.51
Issued	—	—		N/A
Exercised	—	—		N/A
Forfeited	—	—		N/A
Outstanding, March 31, 2023	18,033,640	$	1.93	3.26
Exercisable, March 31, 2023	18,033,640	$	1.93	3.26

Stock-Based Compensation Expense

Stock-based compensation related to restricted stock issued to employees, directors and consultants, warrants and warrants to consultants amounted to $3.4 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively, of which $58.7 thousand and $0.1 million, respectively, was recorded in Sales, general and administrative expenses. There was $3.4 million recorded in Stock-based consulting expense for the three months ended March 31, 2023. There were no expenses recorded in Stock-based consulting expense for the three months ended March 31, 2022.

33

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

18.    Related Party Transactions

The Company held a Special Meeting on February 28, 2023. Of the 29.3 million shares of Common Stock outstanding on January 19, 2023, the record date, 17.2 million shares were represented at the Special Meeting, in person or by proxy, constituting a quorum. At the meeting, the shareholders approved (i) the Services Agreement whereby Sadot engaged Aggia, to provide certain advisory services to Sadot for managing Sadot’s business of wholesaling food and engaging in the purchase and sale of physical food commodities (the “Sadot Transaction”); (ii) an amendment of the Company’s articles of incorporation to increase the number of authorized shares of common stock from 50.0 million to 150.0 million; (iii) for purposes of complying with NASDAQ Listing Rule 5635(b), the issuance of the Shares pursuant to the Services Agreement entered between the Company, Sadot and Aggia representing more than 20% of our common stock outstanding, which would result in a “change of control” of the Company under applicable Nasdaq listing rules; (iv) for purposes of complying with NASDAQ Listing Rule 5635(c), the issuance of up to 14.4 million Shares of Common Stock to Aggia pursuant to the Services Agreement and net income generated thresholds; (v) the right of Aggia to nominate up to eight directors to the Board of Directors subject to achieving net income thresholds as set forth in the Services Agreement; and (vi) the adoption of the 2023 Equity Incentive Plan.

In April of 2023, MMI recognized a related party relationship between newly appointed directors of the Company and Aggia. As of March 31, 2023, Aggia owned 8.9% of the Company's commons stock. While a related party relationship exists, the amounts recognized during the period are immaterial to the Company's consolidated results.

During the three months ended March 31, 2023, the Company recorded Stock-based consulting expense of $3.4 million to its related party, Aggia for consulting services rendered. As of March 31, 2023 the Company accrued stock-based compensation expense due to related party of $3.4 million.

Additionally, for the three months ended March 31, 2023, the Company reimbursed Aggia for all operating costs related to Sadot including labor, operating and general administrative expenses of $0.6 million, $0.2 million and $0.1 million, respectively.

The Company will continue to monitor and evaluate its related party transactions to ensure that they are conducted in accordance with applicable laws and regulations and in the best interests of the Company and its shareholders.

34

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

19.    Subsequent Events

Stock Issuance

On April 5, 2023, the Company authorized the issuance of an aggregate of 29.7 thousand shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2023. The Company accrued for the liability as of March 31, 2023.

Appointment of Directors

On April 3, 2023, the Board appointed Marvin Yeo and Paul Sansom to the Board of Directors, effective April 10, 2023.

Repurchase Program

On April 13, 2023, the Company announced that its Board of Directors had approved a share repurchase program. Under the program, the Company is authorized to purchase shares of its common stock with a value of up to $2.0 million in open market transactions at the discretion of management.

35

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Preliminary Note

The following Management’s Discussion and Analysis (“MD&A”), prepared as of May 10, 2023, should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements of Muscle Maker, Inc., for the three months ended March 31, 2023 together with the audited financial statements of the Company for the year ended December 31, 2022 and the accompanying MD&A for that fiscal year appearing in our Annual Report on 2022 Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2023. Unless otherwise indicated or the context otherwise requires, all references to the terms “Company,” “company,” “Muscle Maker,” “we,” “us,” “our”, “Group” and similar terms refer to Muscle Maker, Inc., together with its consolidated subsidiaries.

Our website address is http://musclemakerinc.com. The information on, or that can be accessed through, our website is not part of this Report. The SEC also maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are also available to the public through the SEC’s website at www.sec.gov.

This MD&A is the responsibility of management. Prior to its release, the Company’s Board of Directors (the “Board”) approved this MD&A on the Audit Committee’s recommendation. The Company presents its financial statements in U.S. Dollars. Amounts in this MD&A are stated in U.S. Dollars unless otherwise indicated.

Forward-Looking Statements

This Report contains forward-looking statements as defined in the federal securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance. These forward-looking statements are not guarantees of future performance, conditions, or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of Muscle Maker’s management’s control. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “forecast,” “model,” “proposal,” “should,” “may,” “intend,” “estimate,” and “continue,” and similar expressions (or the negative versions of such words or expressions), are intended to identify forward-looking statements. These forward-looking statements include, without limitation, information concerning Muscle Maker’s possible or assumed future results of operations, business strategies, debt levels, competitive position, industry environment and possible growth opportunities. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Reference is made to “Factors That May Affect Future Results and Financial Condition” in this Item 2 for a discussion of some of the uncertainties, risks and assumptions associated with these statements.

OVERVIEW

Muscle Maker, Inc. ("MMI") is our parent company and is headquartered in Ft. Worth, Texas. In late 2022, MMI began a transformation from a U.S.-centric restaurant business into a global, food-focused organization with two distinct business units.

1.Sadot LLC is an international agri-commodities company engaged in trading and shipping of food and feed (e.g., soybean meal, wheat and corn) via dry bulk cargo ships to/from markets such as Brazil, Canada, China, India, Japan, Malaysia, Philippines, Poland, Romania, Ukraine and Vietnam. Sadot competes with the ABCD commodity companies (ADM, Bunge, Cargill, Louis-Dreyfus) as well as many regional organizations. Sadot was formed as part of the Company’s diversification strategy to own and operate, through its subsidiaries, the business lines throughout the food value chain. Sadot is MMI's largest operating unit.

2.MMI Restaurant Group has three unique “healthier for you” concepts, including two fast casual restaurant concepts, Pokémoto and Muscle Maker Grill, plus one subscription-based fresh prep meal concept, SuperFit Foods. Our Company was founded on the belief of taking every-day menu options and converting them into “healthier for you” menu choices. Consumers are demanding healthier choices, customization, flavor and convenience. Each of our three concepts offers different menus that are tailored to specific consumer segments. We believe our concepts deliver highly differentiated customer experiences.

As of March 31, 2023, the Company had a cash balance, a working capital surplus and an accumulated deficit of $6.4 million, $6.4 million and $80.4 million, respectively. During the three months ended March 31, 2023, the Company incurred a Pre-tax net loss of $1.1 million and Net cash used in operations of $3.3 million. The Company believes that our

36

existing cash on hand and future cash flows from our franchise operations, will be sufficient to fund our operations, anticipated capital expenditures and repayment obligations over the next 12 months.

Key Financial Definitions

We review a number of financial and operating metrics, including the following key metrics and non-GAAP measures, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Governmental and other economic factors affecting our operations may vary.

	For the Three Months Ended March 31,
	2023	2022
	$’000	$’000
Revenues:
Commodity sales	210,366	—
Company restaurant sales, net of discounts	2,301	2,694
Franchise royalties and fees	284	208
Franchise advertising fund contributions	16	18
Total revenues	212,967	2,920
Operating Costs and Expenses:
Commodity operating expenses:
Commodity cost	205,055	—
Labor	620	—
Other commodity operating expenses	154	—
Total commodity operating expenses	205,829	—
Restaurant operating expenses:
Food and beverage costs	839	1,026
Labor	880	1,073
Rent	274	340
Other restaurant operating expenses	472	650
Total restaurant operating expenses	2,465	3,089
Depreciation and amortization expenses	633	476
Franchise advertising fund expenses	16	18
Preopening expenses	36	—
Post-closing expenses	94	—
Stock-based consulting expenses	3,359	—
Sales, general and administrative expenses	2,142	1,324
Loss from operations	(1,607)	(1,987)
EBITDA	(427)	(1,426)
Adjusted EBITDA	2,391	(1,547)

The breakout of our main revenue streams by business segment is shown below:

	Three Months Ended March 31,
	2023		2022
Sadot Division	98.8	%	—
Restaurant Division	1.2	%	100.0	%

Our key business and financial metrics are explained in detail below.

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Revenues

Our revenues are derived from four primary sources: Physical Commodity sales, Company restaurant sales, Franchise revenues and vendor rebates from Franchisees. Franchise revenues are comprised of Franchise royalty revenues collected based on 2% to 6% of franchisee net sales and other franchise revenues which include initial and renewal franchisee fees. Vendor rebates are received based on volume purchases or services from franchise owned locations. In addition, we have Other revenues which consists of gift card breakage, which is recognized when we determine that there is no further legal obligation to remit the unredeemed gift card balance.

Commodity Operating Expenses

Commodity Cost

Commodity costs include the direct cost associated with purchasing the physical food commodities. The cost includes the cost of the inventory, insurance, shipping and other cost associated with transporting the physical food commodity. The components of Commodity cost are variable in nature, change with sales volume, logistics and are subject to fluctuations in Commodity costs.

Labor

Commodity labor cost consists of consulting fees paid for traders, logistics, and operations personnel to perform the purchases and sale of physical food commodities. Similar to other cost items, we expect total Commodity labor costs to increase as our Commodity sales revenues grows.

Other Commodity Operating Expenses

Other commodity operating expenses consist of food commodity purchase and sales expenses not inclusive of Commodity cost and Labor. These expenses are generally travel and office expenses.

Restaurant Operating Expenses

Food and Beverage Costs

Food and beverage costs include the direct costs associated with food, beverage and packaging of our menu items at Company-operated restaurants partially offset by vendor rebates from Company-owned stores. The components of food, beverages and supplies are variable in nature, change with sales volume, are affected by menu mix and are subject to fluctuations in Commodity costs.

Labor

Restaurant labor costs, consists of Company-operated restaurant-level management and hourly labor costs, including salaries, wages, payroll taxes, workers’ compensation expense, benefits and bonuses paid to our Company-operated restaurant-level team members. Like other cost items, we expect total restaurant labor costs at our Company-operated restaurants to increase due to inflation and as our Company restaurant revenues grow. Factors that influence labor costs include minimum wage and employer payroll tax legislation, mandated health care costs and operational productivity established by the management team.

Rent

Restaurant rent consist of Company-operated restaurant-level rental or lease payments applicable to executed rental or lease agreements. In many cases these rental payments may include payments for common area maintenance as well as property tax assessments. Our rent strategy in some locations consists of a variable rent structure calculated on net sales of the restaurant. While this can have a negative effect on higher volume locations where we cannot leverage a fixed rent, it provides downside protection for lower volume locations.

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Other Restaurant Operating Expenses

Other restaurant operating expenses consist of Company-operated restaurant-level ancillary expenses not inclusive of Food and beverage, Labor and Rent expense. These expenses are generally marketing, advertising, merchant and bank fees, utilities, leasehold and equipment repairs, insurance and maintenance. A portion of these costs are associated with third party delivery services such as Uber Eats, Grub Hub, DoorDash and others. The fees associated with these third-party delivery services can range up to 25% of the total order being delivered. Management believes delivery is a critical component of our business model and industry trends will continue to push consumers towards delivery. We have adjusted our cost structure to reflect different pricing models, portion sizes, menu offerings and other considerations to potentially partially offset these rising costs of delivery.

Depreciation and Amortization Expenses

Depreciation and amortization expenses primarily consist of the depreciation of property and equipment and amortization of intangible assets.

Franchise Advertising Expenses

Franchise advertising expenses are recognized sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee incurs the corresponding advertising expense. The Company records the related advertising expenses as incurred under Sales, general and administrative expenses.

Pre-Opening Expenses

Pre-opening expenses primarily consist of expenses associated with opening a Company-operated location and expenses related to Company-operated locations prior to the location opening.

Post-Closing Expenses

Post-closing expenses primarily consist of expenses associated with closing a Company-operated location and expenses related to Company-operated locations after the location has closed.

Stock-based Consulting Expenses

Stock-based consulting expenses are related to consulting fees due to Aggia for Sadot operations. Based on the servicing agreement with Aggia, the consulting fees are calculated at approximately 80.0% of the Net income generated by the Sadot business segment. For the three months ended March 31, 2023, $3.4 million is recorded as Stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Statements of Operations and a corresponding liability is recorded as Accrued stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Balance Sheets. This expense is expected to be paid in stock in 2023.

Sales, General and Administrative Expenses

Sales, general and administrative expenses include expenses associated with corporate and administrative functions that support our operations, including wages, benefits, travel expense, stock-based compensation expense, legal and professional fees, training, investor relations and other corporate costs. We incur incremental Sales, general and administrative expenses as a result of being a publicly listed company on the NASDAQ capital market. A certain portion of these expenses are related to the preparation of an initial stock offering and subsequent capital raises and should be considered one-time expenses.

Other (Expense) / Income

Other (expense) / income consists of amortization of debt discounts on the convertible notes, interest expense related to notes payable, Change in fair value of accrued compensation and gains on debt extinguishments in connection with the Paycheck Protection Program, (“PPP”) loan forgiveness.

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Income Taxes

Income taxes represent federal, state and local current and deferred income tax expenses.

Non-GAAP Measures

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures. We define EBITDA as Net loss, adjusted for depreciation, amortization, interest income / (expense), and income taxes. We define Adjusted EBITDA as Net loss, adjusted for depreciation, amortization, net interest (income) expense, income taxes, impairment expenses, stock-based consulting expense, derived from amounts presented in the Unaudited Condensed Consolidated Statement of Operations and the associated Notes to the Unaudited Condensed Consolidated Financial Statements. We believe that EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, (collectively, the “Non-GAAP Measures”) are useful metrics for investors to understand and evaluate our operating results and ongoing profitability because they permit investors to evaluate our recurring profitability from our ongoing operating activities.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, have certain limitations, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under U.S. GAAP. We caution investors that amounts presented in accordance with our definitions of any of the Non-GAAP Measures may not be comparable to similar measures disclosed by other issuers, because some issuers calculate certain of the Non-GAAP Measures differently or not at all, limiting their usefulness as direct comparative measures.

Reconciliations of EBITDA, Adjusted EBITDA and Other Non-GAAP Measures

The following table presents a reconciliation of EBITDA and Adjusted EBITDA from the most comparable U.S. GAAP measure, Net loss, and the calculations of the Net loss Margin and Adjusted EBITDA Margin for the three months ended March 31, 2023 and 2022:

	For the Three Months Ended March 31,
	2023		2022
	$’000		$’000
Net loss	(1,066)		(1,886)
Adjustments to EBITDA:
Depreciation and amortization expenses	633		476
Interest expense, net	3		(18)
Income tax	3		2
EBITDA	(427)		(1,426)
Adjustments to Adjusted EBITDA:
Other income / (expense)	—		19
Change in fair value of accrued compensation	(541)		—
Gain on debt extinguishment	—		(140)
Stock-based consulting expenses	3,359		—
Adjusted EBITDA	2,391		(1,547)
Total revenue	212,967		2,920
Net loss Margin	(0.5)	%	(64.6)	%
Adjusted EBITDA Margin	1.1	%	(53.0)	%

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Unaudited Condensed Consolidated Results of Operations - Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively:

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Revenues:
Commodity sales	210,366	—	210,366	NM
Company restaurant sales, net of discounts	2,301	2,694	(393)	(14.6)	%
Franchise royalties and fees	284	208	76	36.5	%
Franchise advertising fund contributions	16	18	(2)	(11.1)	%
Total revenues	212,967	2,920	210,047	7193.4	%
Operating Costs and Expenses:
Commodity operating expenses:
Commodity cost	205,055	—	205,055	NM
Labor	620	—	620	NM
Other commodity operating expenses	154	—	154	NM
Total commodity operating expenses	205,829	—	205,829	NM
Restaurant operating expenses:
Food and beverage costs	839	1,026	(187)	(18.2)	%
Labor	880	1,073	(193)	(18.0)	%
Rent	274	340	(66)	(19.4)	%
Other restaurant operating expenses	472	650	(178)	(27.4)	%
Total restaurant operating expenses	2,465	3,089	(624)	(20.2)	%
Depreciation and amortization expenses	633	476	157	33.0	%
Franchise advertising fund expenses	16	18	(2)	(11.1)	%
Pre-opening expenses	36	—	36	NM
Post-closing expenses	94	—	94	NM
Stock-based consulting expenses	3,359	—	3,359	NM
Sales, general and administrative expenses	2,142	1,324	818	61.8	%
Total costs and expenses	214,574	4,907	209,667	4272.8	%
Loss from operations	(1,607)	(1,987)	380	(19.1)	%
Other Income:
Other income / (expense)	—	(19)	19	(100.0)	%
Interest income / (expense), net	3	(18)	21	(116.7)	%
Change in fair value of accrued compensation	541	—	541	NM
Gain on debt extinguishment	—	140	(140)	(100.0)	%
Total other income, net	544	103	441	428.2	%
Loss Before Income Tax	(1,063)	(1,884)	821	(43.6)	%
Income tax	3	2	1	50.0	%
Net loss	(1,066)	(1,886)	820	(43.5)	%
NM= not meaningful

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The following table sets forth our results of operations as a percentage of total revenue for each period presented preceding:

	Three Months Ended March 31,
	2023		2022
	$’000		$’000
Revenues:
Commodity sales	98.8	%	—
Company restaurant sales, net of discounts	1.1	%	92.3	%
Franchise royalties and fees	0.1	%	7.1	%
Franchise advertising fund contributions	—		0.6	%
Total revenues	100.0	%	100.0	%
Operating Costs and Expenses:
Commodity operating expenses:
Commodity cost	96.3	%	—
Labor	0.3	%	—
Other commodity operating expenses	0.1	%	—
Total commodity operating expenses	96.6	%	—
Restaurant operating expenses:
Food and beverage costs	0.4	%	35.1	%
Labor	0.4	%	36.7	%
Rent	0.1	%	11.6	%
Other restaurant operating expenses	0.2	%	22.3	%
Total restaurant operating expenses	1.2	%	105.8	%
Depreciation and amortization expenses	0.3	%	16.3	%
Franchise advertising fund expenses	—		0.6	%
Pre-opening expenses	—		—
Post-closing expenses	—		—
Stock-based consulting expenses	1.6	%	—
Sales, general and administrative expenses	1.0	%	45.3	%
Total costs and expenses	100.8	%	168.0	%
Loss from operations	(0.8)	%	(68.0)	%
Other Income:
Other income / (expense)	—		(0.7)	%
Interest income / (expense), net	—		(0.6)	%
Change in fair value of accrued compensation	0.3	%	—
Gain on debt extinguishment	—		4.8	%
Total other income, net	0.3	%	3.5	%
Loss Before Income Tax	(0.5)	%	(64.5)	%
Income tax	—	%	0.1	%
Net loss	(0.5)	%	(64.6)	%

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Revenues

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Revenues:
Commodity sales	210,366	—	210,366	NM
Company restaurant sales, net of discounts	2,301	2,694	(393)	(14.6)	%
Franchise royalties and fees	284	208	76	36.5	%
Franchise advertising fund contributions	16	18	(2)	(11.1)	%
Total revenues	212,967	2,920	210,047	7193.4	%
NM= not meaningful

Our revenues totaled $213.0 million for the three months ended March 31, 2023, compared to $2.9 million for the three months ended March 31, 2022. The $210.0 million increase is primarily attributed to an increase in Commodity sales as a direct result of the formation of Sadot and its added revenue.

We generated Commodity sales of $210.4 million for the three months ended March 31, 2023. We did not have any Commodity sales for the three months ended March 31, 2022. This represented an increase of $210.4 million, which is attributable to Sadot sales generated from physical food related commodities.

We generated Company restaurant sales, net of discounts, of $2.3 million for the three months ended March 31, 2023, compared to $2.7 million for the three months ended March 31, 2022. This represented an decrease of $0.4 million, or 14.6%, which is mainly attributable to the closures of certain unprofitable Muscle Maker Grill locations.

Franchise royalties and fees for the three months ended March 31, 2023 totaled $0.3 million compared to $0.2 million for the three months ended March 31, 2022. This represents an increase of $0.1 million, or 36.5%. In 2023, the franchise fees were higher, primarily due to termination of one Muscle Maker Grill Franchise agreement, which corresponds to accelerating the recognition of initial franchise fees.

Franchise advertising fund contributions for the three months ended March 31, 2023 totaled $16.0 thousand compared to $18.0 thousand for the three months ended March 31, 2022. The Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense. The decrease of $2.0 thousand or 11.1%, is a direct result of the decrease in Muscle Maker Grill franchises and the national advertising services to benefit the brand as a whole.

Operating Costs and Expenses

Operating costs and expenses primarily consist of Commodity costs, Restaurant food and beverage costs, Restaurant labor expense, Restaurant rent expense, Other restaurant operating expenses, Depreciation and amortization expenses and Sales, general and administrative expenses.

Commodity Costs

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Commodity cost	205,055	—	205,055	NM

Commodity costs for the three months ended March 31, 2023, totaled $205.1 million or 97.5% as a percentage of Commodity sales. There was no Commodity cost for the three months ended March 31, 2022. The $205.1 million increase resulted from a new line of business operated by Sadot.

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Commodity Labor Cost

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Labor	620	—	620	NM

Commodity labor costs for the three months ended March 31, 2023, totaled $0.6 million or 0.3% as a percentage of Commodity sales. There were no Commodity labor costs for the three months ended March 31, 2022. The $0.6 million increase resulted from a new line of business operated by Sadot.

Other Commodity Operating Expenses

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Other commodity operating expenses	154	—	154	NM

Other commodity operating expenses for the three months ended March 31, 2023 totaled $0.2 million or 0.1% as a percentage of Commodity sales There were no Other commodity operating expenses for the three months ended March 31, 2022. The $0.2 million increase resulted from a new line of business operated by Sadot.

Restaurant Food and Beverage Costs

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Food and beverage costs	839	1,026	(187)	(18.2)	%

Restaurant food and beverage costs for the three months ended March 31, 2023 totaled $0.8 million or 36.5% as a percentage of Company restaurant net sales, and $1.0 million or 38.1%, as a percentage of Company restaurant net sales, for the three months ended March 31, 2022. The $0.2 million decrease resulted from a decrease in sales due to the closures of certain unprofitable Muscle Maker Grill locations. Total restaurant food and beverage cost as a percentage of sales decreased by 1.6% as a result of higher commodity prices in 2023.

Restaurant Labor Expense

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Labor	880	1,073	(193)	(18.0)	%

Restaurant labor expense for the three months ended March 31, 2023 totaled $0.9 million, or 38.2%, as a percentage of Company restaurant net sales, and $1.1 million, or 39.8%, as a percentage of Company restaurant net sales, for the three months ended March 31, 2022. The $0.2 million decrease resulted from a reduction in Labor expense.

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Restaurant Rent Expense

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Rent	274	340	(66)	(19.4)	%

Restaurant rent expense for the three months ended March 31, 2023 totaled $0.3 million, or 11.9% as a percentage of restaurant sales, and $0.3 million, or 12.6%, as a percentage of restaurant sales, for the three months ended March 31, 2022. The decrease of $0.1 million is directly attributed to the closure of a nonperforming corporate location. The percentage of total sales decreased by 0.7% as sales decreased overall.

Other Restaurant Operating Expenses

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Other restaurant operating expenses	472	650	(178)	(27.4)	%

Other restaurant operating expenses for the three months ended March 31, 2023 totaled $0.5 million, or 20.5% as a percentage of restaurant sales, and $0.7 million, or 24.1% as a percentage of restaurant sales, for the three months ended March 31, 2022. The $0.2 million decrease is primarily due to a decrease in insurance costs resulting from a consolidation in insurance companies and a decrease in third party processing fees, partially offset by an increase in merchant processing fees. The Other restaurant operating expenses as a percent of total sales decreased by 3.6%.

Depreciation and Amortization Expenses

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Depreciation and amortization expenses	633	476	157	33.0	%

Depreciation and amortization expenses for the three months ended March 31, 2023 totaled $0.6 million compared to $0.5 million, for the three months ended March 31, 2022. The $0.2 million increase is mainly attributed to the accelerated depreciation of leasehold improvements for leases that were modified resulting in a shorter life.

Franchise Advertising Fund Expenses

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Franchise advertising fund expenses	16	18	(2)	(11.1)	%

Franchise advertising fund expenses for the three months ended March 31, 2023 totaled $16.0 thousand compared to $18.0 thousand, for the three months ended March 31, 2022. The $2.0 thousand decrease is mainly attributed to the decrease of $2.0 thousand or 11.1%, is a direct result of the decrease in Muscle Maker Grill franchises and the national advertising services to benefit the brand.

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Pre-Opening Expenses

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Pre-opening expenses	36	—	36	NM

Pre-opening expenses for the three months ended March 31, 2023 totaled $36.0 thousand. There were no Pre-opening expenses for the three months ended March 31, 2022. The increase in pre-opening expense resulted from expenses incurred prior to the opening of our new Company-owned stores.

Post-Closing Expenses

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Post-closing expenses	94	—	94	NM

Post-closing expenses for the three months ended March 31, 2023 totaled $0.1 million. There were no Post-closing expenses for the three months ended March 31, 2022. The increase in Post-closing expenses resulted from expenses incurred after the closing of underperforming Company-owned stores.

Stock-Based Consulting Expenses

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Stock-based consulting expenses	3,359	—	3,359	NM

Stock-based consulting expenses for the three months ended March 31, 2023, totaled $3.4 million. There were no Stock-based consulting expenses for the three months ended March 31, 2022. The increase in Stock-based consulting expenses is the result of consulting fees due to Aggia for Sadot operations. Based on the servicing agreement with Aggia, the consulting fees are calculated at approximately 80.0% of the Net income generated by the Sadot business segment. This expense is expected to be paid in stock in 2023.

Sales, General and Administrative Expenses

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Sales, general and administrative expenses	2,142	1,324	818	61.8	%

Sales, general and administrative expenses for the three months ended March 31, 2023 totaled $2.1 million, or 1.0% of total revenue, compared to $1.3 million, or 45.3% of total revenue, for the three months ended March 31, 2022. The $0.8 million increase was primarily attributable to an increase in professional and consulting fees and employee salaries and benefits.

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Total Other Income, Net

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Total other income / (expense), net	544	103	441	428.2	%

Total other income / (expense), net for the three months ended March 31, 2023 totaled $0.5 million compared to $0.1 million, for the three months ended March 31, 2022. The $0.4 million decrease in Total other income / (expense), net was primarily attributable to an increase in the Gain on extinguishment of debt of $0.1 million due to the forgiveness of our PPP loans, a decrease of $0.5 million in the Change in fair value of accrued compensation, partially offset by a $21.0 thousand decrease in Interest expense and a $19.0 thousand decrease in Other income.

Income Tax

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Income tax	3	2	1	50.0	%

Our Income tax for the three months ended March 31, 2023, was $3.0 thousand which was an increase of $1.0 thousand as compared to Income taxes of $2.0 thousand for the three months ended March 31, 2022 due to an increase in current state taxes.

Net Loss

	Three Months Ended March 31,		Variance
	2023	2022	$	%
	$’000	$’000	$’000
Net loss	(1,066)	(1,886)	820	(43.5)	%

Our Net loss for the three months ended March 31, 2023, was $1.1 million which was a decrease of $0.8 million as compared to a Net loss of $1.9 million for the three months ended March 31, 2022, resulting from an increase of Total revenues of $210.0 million, partially offset by the increase in Total cost and expenses of $209.7 million and a $19.0 thousand decrease in Other income.

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The following table represents selected items in our Condensed Consolidated Statements of Operations for the three months ended March 31, 2023, by our operating segments:

	Three Months Ended March 31, 2023
	Restaurant division	Sadot Division	Corporate adj.	Consolidated
	$’000	$’000	$’000	$’000
Revenues:
Commodity sales	—	210,366	—	210,366
Company restaurant sales, net of discounts	2,301	—	—	2,301
Franchise royalties and fees	284	—	—	284
Franchise advertising fund contributions	16	—	—	16
Total revenues	2,601	210,366	—	212,967
Operating Costs and Expenses:
Commodity operating expenses:
Commodity cost	—	205,055	—	205,055
Labor	—	620	—	620
Other commodity operating expenses	—	154	—	154
Total commodity operating expenses	—	205,829	—	205,829
Restaurant operating expenses:
Food and beverage costs	839	—	—	839
Labor	880	—	—	880
Rent	274	—	—	274
Other restaurant operating expenses	472	—	—	472
Total restaurant operating expenses	2,465	—	—	2,465
Depreciation and amortization expenses	316	—	317	633
Franchise advertising fund expenses	16	—	—	16
Preopening expenses	36	—	—	36
Post-closing expenses	93	—	1	94
Stock-based consulting expenses	—	—	3,359	3,359
Sales, general and administrative expenses	82	286	1,774	2,142
Total costs and expenses	3,008	206,115	5,451	214,574
(Loss) / income from operations	(407)	4,251	(5,451)	(1,607)
Other Income:
Interest income , net	2	—	1	3
Change in fair value of accrued compensation	—	—	541	541
Total other income, net	2	—	542	544
(Loss) / Income Before Income Tax	(405)	4,251	(4,909)	(1,063)
Income tax	—	—	3	3
Net (loss) / income	(405)	4,251	(4,912)	(1,066)

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The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2022, by our operating segments:

	Three Months Ended March 31, 2022
	Restaurant division	Sadot Division	Corporate adj.	Consolidated
	$’000	$’000	$’000	$’000
Revenues:
Company restaurant sales, net of discounts	2,694	—	—	2,694
Franchise royalties and fees	208	—	—	208
Franchise advertising fund contributions	18	—	—	18
Total revenues	2,920	—	—	2,920
Operating Costs and Expenses:
Restaurant operating expenses:
Food and beverage costs	1,026	—	—	1,026
Labor	1,073	—	—	1,073
Rent	340	—	—	340
Other restaurant operating expenses	650	—	—	650
Total restaurant operating expenses	3,089	—	—	3,089
Depreciation and amortization expenses	119	—	357	476
Franchise advertising fund expenses	18	—	—	18
Sales, general and administrative expenses	257	—	1,067	1,324
Total costs and expenses	3,483	—	1,424	4,907
Loss from operations	(563)	—	(1,424)	(1,987)
Other Income:
Other income	2	—	(21)	(19)
Interest income/ (expense), net	3	—	(21)	(18)
Gain on debt extinguishment	140	—	—	140
Total other income, net	145	—	(42)	103
Loss Before Income Tax	(418)	—	(1,466)	(1,884)
Income tax	—	—	2	2
Net loss	(418)	—	(1,468)	(1,886)

Liquidity and Capital Resources

Liquidity

We measure our liquidity in a number of ways, including the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Cash	6,386	9,898
Working capital surplus	6,420	4,033
Notes payable	947	981

Availability of Additional Funds

Although we have a working capital surplus of $6.4 million, we presently have an accumulated deficit of $80.4 million, as of December 31, 2022, and we utilized $3.3 million of cash in operating activities during the three months ended March 31, 2023. We believe that our existing cash on hand and future cash flows from our franchise operations and commodity

49

trading operations, will be sufficient to fund our operations, anticipated capital expenditures and repayment obligations over the next 12 months.

In the event we are required to obtain additional financing, either through borrowings, private placements, public offerings, or some type of business combination, such as a merger, or buyout, and there can be no assurance that we will be successful in such pursuits. We may be unable to acquire the additional funding necessary to continue operating. Accordingly, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell one or more lines of business or all or a portion of our assets, enter into a business combination or reduce or eliminate operations. These possibilities, to the extent available, may be on terms that result in significant dilution to our shareholders or that result in our shareholders losing all of their investment in our Company.

If we need to raise additional capital, we do not know what the terms of any such capital raising would be. In addition, any future sale of our equity securities could dilute the ownership and control of your shares and could be at prices substantially below prices at which our shares currently trade. We may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to our shareholders. The occurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Any failure to raise additional funds on favorable terms could have a material adverse effect on our liquidity and financial condition.

Sources and Uses of Cash for the Three Months Ended March 31, 2023 and March 31, 2022

For the three months ended March 31, 2023, we used Net cash of $3.3 million compared to $0.9 million, for the three months ended March 31, 2022, in operations. Our Net cash used for the three months ended March 31, 2023, was primarily attributable to our Net loss of $1.1 million, adjusted for net non-cash income in the aggregate amount of $4.6 million offset by $6.8 million of Net cash provided by changes in the levels of operating assets and liabilities. Our Net cash used for the three months ended March 31, 2022, was primarily attributable to our Net loss of $1.9 million, adjusted for net non-cash income in the aggregate amount of $0.6 million, partially offset by $0.3 million of Net cash used in changes in the levels of operating assets and liabilities.

For the three months ended March 31, 2023, Net cash used in investing activities was $0.2 million, of which $0.1 million was used to purchase Property and equipment. For the three months ended March 31, 2022, Net cash used in investing activities was $35.0 thousand, of which $35.0 thousand was used to purchase Property and equipment.

For the three months ended March 31, 2023, Net cash used in financing activities was $34.0 thousand, consisting of repayments of various other notes payable of $34.0 thousand. For the three months ended March 31, 2022, Net cash provided by financing activities was $32.0 thousand, partially offset by repayments of various other notes payable of $32.0 thousand.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842), which requires companies to recognize lease liabilities and corresponding right-of-use leased assets on the Balance Sheets and to disclose key information about leasing arrangements. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2021, with early adoption permitted.

Additionally, in 2018 and 2019, the FASB issued the following Topic 842–related ASUs:

ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, which clarifies the applicability of Topic 842 to land easements and provides an optional transition practical expedient for existing land easements;

ASU 2018-10, Codification Improvements to Topic 842, Leases, which makes certain technical corrections to Topic 842;

ASU 2018-11, Leases (Topic 842): Targeted Improvements, which allows companies to adopt Topic 842 without revising comparative period reporting or disclosures and provides an optional practical expedient to lessors to not separate lease and non-lease components of a contract if certain criteria are met; and

50

ASU 2019-01, Leases (Topic 842): Codification Improvements, which provides guidance for certain lessors on determining the fair value of an underlying asset in a lease and on the cash flow statement presentation of lease payments received; ASU No. 2019-01 also clarifies disclosures required in interim periods after adoption of ASU No. 2016-02 in the year of adoption.

The Company adopted Topic 842 as of January 1, 2022 and recognized a cumulative-effect adjustment to the opening balance of accumulated deficit of $15.0 thousand as of the adoption date, and recognized an additional $7.8 thousand during the second quarter of 2022, based on updated information on two of our leases, for an aggregate cumulative-effect adjustment to accumulated deficit of $22.8 thousand.

In October 2021, the FASB issued ASU 2021-08 Business Combinations (“Topic 805”): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers”, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The adoption of this guidance did not have a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements and related disclosures.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15€ promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2023. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of such date our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information requested to be disclosed by us in our reports that we file or submit under the Exchange Act.

Changes in Internal Control over Financial Reporting

Our Company has added and will continue to add additional internal control procedures, additional resources and software to increase the internal control aspects of the company as we integrate our Sadot subsidiary into the overall business. Other than above changes, there were no other changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

51

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are a defendant or plaintiff in various legal actions that arise in the normal course of business. We record legal costs associated with loss contingencies as incurred and have accrued for all probable and estimable settlements.

Item 1.A. Risk Factors

Not applicable. However, see Item 7 ("Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors that May Affect Future Results and Financial Condition") of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 21, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuance of Stock

On January 5, 2023, the Company authorized the issuance of an aggregate of 31.3 thousand shares of common stock to the members of the board of directors as compensation earned during the fourth quarter of 2022.

On March 27, 2023, the Company authorized the issuance of 2.8 million shares of common stock to Aggia as consulting fees earned during the fourth quarter of 2022.

The offers, sales, and issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business or other relationships, to information about us.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

52

Item 6. Exhibits

Exhibit No.	Exhibit Description
3.1	Certificate of Amendment to Articles of Incorporation of Muscle Maker, Inc. (incorporated by reference to Exhibit 3.1 to the Registrants Current Report on Form 8-K filed on March 7, 2023)
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document*
101.SCH	Inline XBRL Schema Document*
101.CAL	Inline XBRL Calculation Linkbase Document*
101.DEF	Inline XBRL Definition Linkbase Document*
101.LAB	Inline XBRL Label Linkbase Document*
101.PRE	Inline XBRL Presentation Linkbase Document*
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

† Includes management contracts and compensation plans and arrangements

*Filed herewith.

+Previously filed

53

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MUSCLE MAKER, INC
	By:	/s/ Michael J. Roper
		Michael J. Roper
Dated: May 10, 2023		Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Jennifer Black
		Jennifer Black
		Chief Financial Officer (Principal Financial Officer)

54

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Michael J. Roper, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Muscle Maker, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2023	By:	/s/ Michael J. Roper
		Michael J. Roper
		Chief Executive Officer and Secretary
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Jennifer Black, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Muscle Maker, Inc, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2023	By:	/s/ Jennifer Black
		Jennifer Black
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Quarterly Report of Muscle Maker, Inc. (the “Company”) on Form 10-Q for the three months ended March 31, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, Michael J. Roper, Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:

1.the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 10, 2023	By:	/s/ Michael J. Roper
		Michael J. Roper
		Chief Executive Officer and Secretary
		(Principal Executive Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Muscle Maker, Inc. (the “Company”) on Form 10-Q for the three months ended March 31, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, Jennifer Black, Chief Financial Officer of the Company certifies, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:

1.the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 10, 2023	By:	/s/ Jennifer Black
		Jennifer Black
		Chief Financial Officer
		(Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Cover - shares	3 Months Ended
	Mar. 31, 2023	May 10, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-39223
Entity Registrant Name	Muscle Maker, Inc.
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	47-2555533
Entity Address, Address Line One	1751 River Run
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Fort Worth
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	76107
City Area Code	(832)
Local Phone Number	604-9568
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	GRIL
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		32,197,066
Document Fiscal Year Focus	2023
Entity Central Index Key	0001701756
Amendment Flag	false
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash	$ 6,386	$ 9,898
Accounts receivable, net of allowance for doubtful accounts of $28.8 thousand and $23.4 thousand as of March 31, 2023 and December 31, 2022, respectively	4,961	135
Inventory	35,145	298
Prepaid expenses and other current assets	206	317
Total current assets	46,698	10,648
Right to use assets	2,189	2,433
Property and equipment, net	1,680	1,895
Goodwill	2,626	2,626
Intangible assets, net	4,301	4,611
Deposit on farmland	5,002	4,914
Security deposits and other assets	102	103
Total assets	62,598	27,230
Current liabilities:
Accounts payable and accrued expenses	35,863	1,953
Accrued stock-based compensation expense - related party	3,400	3,603
Notes payable, current	225	222
Operating lease liability, current	505	560
Deferred revenue, current	90	95
Other current liabilities	195	182
Total current liabilities	40,278	6,615
Notes payable, non-current	722	759
Operating lease liability, non-current	1,800	2,019
Deferred revenues, non-current	1,228	1,276
Total liabilities	44,028	10,669
Commitments and Contingencies
Stockholders’ equity:
Common stock, $0.0001 par value, 150 million shares authorized, 32.2 million and 29.3 million shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	3	3
Additional paid-in capital	98,988	95,913
Accumulated deficit	(80,421)	(79,355)
Total stockholders’ equity	18,570	16,561
Total liabilities and stockholders’ equity	$ 62,598	$ 27,230

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 28,800	$ 23,400
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	150,000,000	150,000,000
Common stock, issued (in shares)	32,200,000	29,300,000
Common stock, outstanding (in shares)	32,200,000	29,300,000

XML

Condensed Consolidated Statement of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues:
Revenues	$ 212,967,000	$ 2,920,000
Operating Costs and Expenses:
Depreciation and amortization expenses	633,000	476,000
Franchise advertising fund expenses	16,000	18,000
Pre-opening expenses	36,000	0
Post-closing expenses	94,000	0
Stock-based consulting expenses	3,359,000	0
Sales, general and administrative expenses	2,142,000	1,324,000
Total costs and expenses	214,574,000	4,907,000
Loss from operations	(1,607,000)	(1,987,000)
Other Income:
Other income / (expense)	0	(19,000)
Interest income / (expense), net	3,000	(18,000)
Change in fair value of accrued compensation	541,000	0
Gain on debt extinguishment	0	140,000
Total other income, net	544,000	103,000
Loss Before Income Tax	(1,063,000)	(1,884,000)
Income tax	3,000	2,000
Net loss	$ (1,066,000)	$ (1,886,000)
Net Loss Per Share:
Basic (in dollars per share)	$ (0.04)	$ (0.07)
Diluted (in dollars per share)	$ (0.04)	$ (0.07)
Weighted average Number of Common Shares Outstanding:
Basic (in shares)	29,443,394	27,801,604
Diluted (in shares)	29,443,394	27,801,604
Commodity sales
Revenues:
Revenues	$ 210,366,000	$ 0
Company restaurant sales, net of discounts
Revenues:
Revenues	2,301,000	2,694,000
Franchise royalties and fees
Revenues:
Revenues	284,000	208,000
Franchise advertising fund contributions
Revenues:
Revenues	16,000	18,000
Total commodity operating expenses
Operating Costs and Expenses:
Operating costs and expenses	205,829,000	0
Commodity cost
Operating Costs and Expenses:
Operating costs and expenses	205,055,000	0
Labor
Operating Costs and Expenses:
Operating costs and expenses	620,000	0
Other commodity operating expenses
Operating Costs and Expenses:
Operating costs and expenses	154,000	0
Total restaurant operating expenses
Operating Costs and Expenses:
Operating costs and expenses	2,465,000	3,089,000
Food and beverage costs
Operating Costs and Expenses:
Operating costs and expenses	839,000	1,026,000
Labor
Operating Costs and Expenses:
Operating costs and expenses	880,000	1,073,000
Rent
Operating Costs and Expenses:
Operating costs and expenses	274,000	340,000
Other restaurant operating expenses
Operating Costs and Expenses:
Operating costs and expenses	$ 472,000	$ 650,000

XML

Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment
Beginning balance (in shares) at Dec. 31, 2021			26,110,000
Beginning balance at Dec. 31, 2021	$ 24,393	$ (15)	$ 3	$ 95,760	$ (71,370)	$ (15)
Increase (Decrease) in Stockholders' Equity
Cash less exercise of pre-funded warrants (in shares)			2,410,000
Common stock compensation to board of directors (in shares)			94,000
Common stock compensation to board of directors	57			57
Common stock issued as compensation for services (in shares)			30,000
Common stock issued as compensation for services	16			16
Net loss	(1,886)				(1,886)
Ending balance (in shares) at Mar. 31, 2022			28,644,000
Ending balance at Mar. 31, 2022	$ 22,565		$ 3	95,833	(73,271)
Beginning balance (in shares) at Dec. 31, 2022	29,300,000		29,287,000
Beginning balance at Dec. 31, 2022	$ 16,561		$ 3	95,913	(79,355)
Increase (Decrease) in Stockholders' Equity
Common stock compensation to board of directors (in shares)			31,000
Common stock compensation to board of directors	28			28
Common stock issued as compensation for services (in shares)			2,849,000
Common stock issued as compensation for services	3,020			3,020
Net loss	(1,066)				(1,066)
Stock-based compensation - options	$ 27			27
Ending balance (in shares) at Mar. 31, 2023	32,200,000		32,167,000
Ending balance at Mar. 31, 2023	$ 18,570		$ 3	$ 98,988	$ (80,421)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Cash Flows from Operating Activities
Net loss	$ (1,066)	$ (1,886)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	633	476
Stock-based compensation	55	72
Gain on extinguishments of debt	0	(140)
Stock-based consulting expenses	3,359	0	$ 3,600
Change in fair value of compensation	541	0
Loss on disposal of assets	0	240
Bad debt expense	(5)	(9)
Changes in operating assets and liabilities:
Accounts receivable, net	(4,821)	(175)
Inventory	(34,848)	(1)
Prepaid expenses and other current assets	111	698
Security deposits and other assets	0	16
Accounts payable and accrued expenses	33,910	(404)
Accrued stock-based compensation expense - related party	(1,082)	0
Deferred rent	0	(128)
Operating right of use asset and liability, net	(30)	129
Deferred revenue	(53)	191
Other current liabilities	14	(8)
Total adjustments	(2,216)	957
Net cash used in operating activities	(3,282)	(929)
Cash Flows from Investing Activities
Deposit on farmland	(87)	0
Purchases of property and equipment	(109)	(35)
Net cash used in investing activities	(196)	(35)
Cash Flows from Financing Activities
Repayments of notes payables	(34)	(32)
Net cash used in financing activities	(34)	(32)
Net Decrease in Cash	(3,512)	(996)
Cash – beginning of period	9,898	15,767	15,767
Cash – end of period	6,386	14,771	$ 9,898
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$ 3	$ 24

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Business Organization and Nature of Operations

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Organization and Nature of Operations

1.    Business Organization and Nature of Operations

Muscle Maker, Inc. (“MMI”), a Nevada corporation was incorporated in Nevada on October 25, 2019. MMI was a wholly owned subsidiary of Muscle Maker, Inc (“MMI-Cal”), a California corporation incorporated on December 8, 2014, but the two merged on November 13, 2019, with MMI as the surviving entity. MMI wholly owns Muscle Maker Development, LLC (“MMD”), Muscle Maker Corp, LLC (“MMC”) and Muscle Maker USA, Inc (“Muscle USA”). MMD was formed on July 18, 2017, in the State of Nevada for the purpose of running our existing franchise operations and continuing to franchise the Muscle Maker Grill name and business system to qualified franchisees. MMC was formed on July 18, 2017, in the State of Nevada for the purpose of developing new corporate stores and operating new and existing corporate stores of MMI. Muscle USA was formed on March 14, 2019, in the State of Texas for the purpose of opening additional new corporate stores. Muscle Maker Development International LLC, a directly wholly owned subsidiary of MMI, which was formed in Nevada on November 13, 2020, to franchise the Muscle Maker Grill® name, trademarks and business system to qualified franchisees internationally. On March 25, 2021, MMI acquired the assets and trademarks of SuperFit Foods™, a subscription based fresh-prepared meal prep business located in Jacksonville, Florida. On May 14, 2021, MMI acquired the assets and trademarks of PKM Stamford, LLC, Poke Co., LLC, LB Holdings LLC, TNB Holdings, LLC, Poke Co Holdings LLC, GLL Enterprises, LLC, and TNB Holdings II, LLC, each a Connecticut limited liability company, an operator and franchisor of a fast casual restaurant chain concept, collectively known as “Pokémoto®.” On October 19, 2022, MMI formed Sadot LLC, a Delaware limited liability company and a wholly-owned subsidiary of MMI, ("Sadot"), for the purpose of shipping and trading agri-commodities on a global basis.

With the formation of Sadot in late 2022, MMI has evolved from a U.S.-centric restaurant business into a global, food-focused organization. As of March 31, 2023, MMI consisted of two distinct operating units:

1.SADOT LLC: MMI’s largest operating unit is a global agri-commodities company engaged in trading and shipping of food and feed (e.g., soybean meal, wheat, corn, etc.) via dry bulk cargo ships to/from markets such as Brazil, Canada, China, India, Japan, Malaysia, Philippines, Poland, Romania, Ukraine and Vietnam. Sadot competes with the ABCD commodity companies (ADM, Bunge, Cargill, Louis-Dreyfus) as well as many regional organizations. Sadot seeks to diversify over time into a sustainable and forward-looking global agri-foods company.

2.MMI RESTAURANT GROUP: This is MMI’s legacy business with two fast casual restaurant concepts, Pokémoto Hawaiian Poké® and Muscle Maker Grill®, plus a fresh-prep meal service, SuperFit Foods™, with 30+ points of distribution plus in-home and national delivery. As of March 31, 2023, the MMI Restaurant Group included 19 company-owned restaurants, including the SuperFit Foods™ kitchen, and 26 franchise restaurants. The MMI Restaurant Group seeks to develop Pokémoto® into a national restaurant brand through franchising.

MMI and its subsidiaries are hereinafter referred to as the “Company”.

Liquidity

Our primary source of liquidity is cash on hand. As of March 31, 2023, the Company had a cash balance, a working capital surplus and an accumulated deficit of $6.4 million, $6.4 million, and $80.4 million, respectively. During the three months ended March 31, 2023, the Company incurred a Pre-tax net loss of $1.1 million and Net cash used in operations of $3.3 million. The Company believes that our existing cash on hand and future cash flows from our franchise operations, will be sufficient to fund our operations, anticipated capital expenditures and repayment obligations over the next 12 months.

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Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Significant Accounting Policies

2.    Significant Accounting Policies

Basis of Presentation

The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation

of the Unaudited Condensed Consolidated Financial Statements of the Company as of March 31, 2023, and for the three months ended March 31, 2023, and 2022. The results of operations for the three months ended March 31, 2023, and 2022 are not necessarily indicative of the operating results for the full year. It is suggested that these Unaudited Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2022. The Balance Sheet as of December 31, 2022, has been derived from the Company’s audited Financial Statements.

Principles of Consolidation

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and majority-owned subsidiary. Any intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

Certain prior period balances have been reclassified in order to conform to current period presentation. These reclassifications have no effect on the previously reported results of operations or loss per share.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant estimates include:

•the assessment of recoverability of long-lived assets, including property and equipment, goodwill and intangible assets;

•the estimated useful lives of intangible and depreciable assets;

•estimates and assumptions used to value warrants and options;

•the recognition of revenue; and

•the recognition, measurement and valuation of current and deferred income taxes.

Estimates and assumptions are periodically reviewed, and the effects of any material revisions are reflected in the financial statements in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions.

Cash and Cash Equivalents

The Company considers all highly-liquid instruments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of March 31, 2023 or December 31, 2022.

Inventory

Inventories, which are stated at the lower of cost or net realizable value, consist primarily of commodity trade shipments in-transit, perishable food items and supplies. Cost is determined using the first-in, first-out method.

Deposit on Farmland

Deposit on farmland consists of funds paid as a deposit with the intent to acquire farmland in Africa by our Sadot subsidiary. As of March 31, 2023, the Company recorded a deposit of $5.0 million. The Company has entered into a letter of intent with a deposit to purchase undeveloped farmland. The Company is still in final negotiations with the intent to finalize the agreement by the end of the second quarter of 2023.

Property and Equipment

Property and equipment are stated at cost less accumulated Depreciation and amortization expenses. Major improvements are capitalized, and minor replacements, maintenance and repairs are charged to expense as incurred. Depreciation and amortization expenses are calculated on the straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful life or the lease term of the related asset. The estimated useful lives are as follows:

Furniture and equipment	3 – 7 years
Leasehold improvements	1 – 11 years

Intangible Assets

The Company accounts for recorded intangible assets in accordance with the Accounting Standards Codification (“ASC’) 350 “Intangibles – Goodwill and Other”. In accordance with ASC 350, the Company does not amortize intangible assets having indefinite useful lives. The Company determined that as of January 1, 2022, – the trademark – Muscle Maker had a finite life of 3 years and is amortizing the value over the new estimated life. The Company’s goodwill has an indefinite life and is not amortized, but are evaluated for impairment at least annually, or more often whenever changes in facts and circumstances may indicate that the carrying value may not be recoverable. ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment). Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment.

The useful lives of the Company’s intangible assets are:

Franchisee agreements	13 years
Franchise license	10 years
Trademarks	3 – 5 years
Domain name, Customer list and Proprietary recipes	3 – 7 years
Non-compete agreements	2 – 3 years

Impairment of Long-Lived Assets

When circumstances, such as adverse market conditions, indicate that the carrying value of a long-lived asset may be impaired, the Company performs an analysis to review the recoverability of the asset’s carrying value, which includes estimating the undiscounted cash flows (excluding interest charges) from the expected future operations of the asset. These estimates consider factors such as expected future operating income, operating trends and prospects, as well as the effects of demand, competition and other factors. If the analysis indicates that the carrying value is not recoverable from future cash flows, an impairment loss is recognized to the extent that the carrying value exceeds the estimated fair value. Any impairment losses are recorded as operating expenses, which reduce net income.

Convertible Instruments

The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the Financial Accounting Standards Board (“FASB”).

If the instrument is determined not to be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the market price of the Company’s common stock as of the commitment date to the effective conversion price of the instrument.

As of March 31, 2023 and December 31, 2022, the Company deemed the conversion feature was not required to be bifurcated and recorded as a derivative liability.

Related Parties

A party is considered to be related to the Company if the party directly, indirectly, or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Revenue Recognition

The Company’s revenues consist of Commodity sales, Restaurant sales, Franchise royalties and fees, Franchise advertising fund contributions, and Other revenues. The Company recognizes revenues according to Topic 606 of FASB, “Revenue from Contracts with Customers”. Under the guidance, revenue is recognized in accordance with a five-step revenue model, as follows: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when (or as) the entity satisfies a performance obligation. In applying this five-step model, we made significant judgments in identifying the promised goods or services in our contracts with franchisees that are distinct, and which represent separate performance obligations.

Commodity Sales

Commodity sale revenue is generated by our Sadot subsidiary and is recognized when the commodity is delivered as evidenced by the bill of lading and the invoice is prepared and submitted to the customer. During the three months ended March 31, 2023, the Company recorded Commodity sales revenues of $210.4 million. The Company did not have any Commodity sales revenue during the three months ended March 31, 2022.

Restaurant Sales

Retail store revenue at Company-operated restaurants is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales-related taxes. The Company recorded retail store revenues of $2.3 million and $2.7 million during the three months ended March 31, 2023 and 2022, respectively.

The Company sells gift cards which do not have an expiration date, and it does not deduct dormancy fees from outstanding gift card balances. The Company recognizes revenues from gift cards as restaurant revenues once the Company performs its obligation to provide food and beverage to the customer simultaneously with the redemption of the gift card or through gift card breakage, as discussed in Other revenues below.

Franchise Royalties and Fees

Franchise revenues consists of royalties, initial franchise fees and rebates. Royalties are based on a percentage of franchisee net sales revenue. The Company recognizes the royalties as the underlying sales occur. The Company recorded revenue from royalties of $0.2 million and $0.1 million during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company provides the franchisees with management expertise, training, pre-opening assistance, and restaurant operating assistance in exchange for the multi-unit development fees and initial franchise fees. The Company capitalizes these fees upon collection from the franchisee. These initial fees are then recognized as franchise fee revenue on a straight-

line basis over the life of the related franchise agreements and any exercised renewal periods. Cash payments are due upon the execution of the related franchise agreement. The Company’s performance obligation with respect to franchise fee revenues consists of a license to utilize the Company’s brand for a specified period of time, which is satisfied equally over the life of each franchise agreement. If a franchise location closes or a franchise agreement is terminated for any reason, the unrecognized revenue will be recognized in full at that time. The Company recorded revenue from initial franchise fees of $0.1 million and $49.0 thousand during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company has supply agreements with certain food and beverage vendors. Pursuant to the terms of these agreements, rebates are provided to the Company based upon the dollar volume of purchases for all company-owned and franchised restaurants from these vendors. Rebates earned on purchases by franchise stores are recorded as revenue during the period in which the related food and beverage purchases are made. The Company recorded revenue from rebates of $26.0 thousand and $0.1 million during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations. Rebates earned on purchases by Company-owned stores are recorded as a reduction of Food and beverage costs during the period in which the related food and beverage purchases are made.

Franchise Advertising Fund Contributions

Under the Company’s franchise agreements, the Company and its franchisees are required to contribute a certain percentage of revenues to a national advertising fund. The Company’s national advertising services are provided on a system-wide basis and therefore, not considered distinct performance obligations for individual franchisees. In accordance with Topic 606, the Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense. The Company records the related advertising expenses as incurred under Sales, general and administrative expenses. When an advertising contribution fund is over-spent at year-end, advertising expenses will be reported on the Unaudited Condensed Consolidated Statement of Operations in an amount that is greater than the revenue recorded for advertising contributions. Conversely, when an advertising contribution fund is under-spent at a period-end, the Company will accrue advertising costs up to advertising contributions recorded in revenue. The Company recorded contributions from franchisees of $16.0 thousand and $18.0 thousand, respectively, during the three months ended March 31, 2023 and 2022, which are included in Franchise advertising fund contributions on the accompanying Unaudited Condensed Consolidated Statements of Operations.

Other Revenues

Gift card breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote and the Company determines there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction. The determination of the gift card breakage rate is based upon the Company’s specific historical redemption patterns. Gift card liability is recorded in other current liabilities on the Unaudited Condensed Consolidated Balance Sheets.

Deferred Revenue

Deferred revenue primarily includes initial franchise fees received by the Company, which are being amortized over the life of the Company’s franchise agreements. Deferred revenue is recognized in income over the life of the franchise agreements. If a franchise location closes or a franchise agreement is terminated for any reason, the remaining deferred revenue will be recognized in full at that time.

Stock-Based Consulting Expense

Stock-based consulting expenses are for consulting fees due to Aggia related to ongoing Sadot operations and expansion of the global agri-commodities business. Based on the servicing agreement with Aggia LLC FZ, a Company formed under the laws of United Arab Emirates (“Aggia”), the consulting fees are calculated at approximately 80.0% of the Net Income generated by the Sadot business segment. For the three months ended March 31, 2023, $3.4 million is recorded as Stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Statements of Operations and a corresponding liability is recorded as Accrued stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Balance Sheets. This expense is expected to be paid in stock in 2023.

Advertising

Advertising costs are charged to expense as incurred. Advertising costs were $0.1 million and $33.0 thousand for the three months ended March 31, 2023 and 2022, respectively, are included in Sales, general and administrative expenses and $40.0 thousand and $0.1 million, respectively, are included in Other restaurant operating expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations.

Net Loss per Share

Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of potential common shares, if dilutive, resulting from the exercise of warrants, options or the conversion of convertible notes payable.

The following securities are excluded from the calculation of weighted average diluted common shares at March 31, 2023 and 2022, respectively, because their inclusion would have been anti-dilutive:

	March 31,
	2023	2022
	('000	('000
Warrants	18,034	17,874
Options	1,013	100
Convertible debt	24	32
Total potentially dilutive shares	19,071	18,006

Major Vendor

The Company engages various vendors to purchase commodities for resale and distribute food products to their Company-owned restaurants. Purchases from the Company’s three largest commodity suppliers totaled 98% of the Company’s purchases for the three months ended March 31, 2023. Purchases from the Company’s largest food products supplier totaled 45% of the Company’s purchases for the three months ended March 31, 2022.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of the FASB Accounting ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”).

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities.

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The carrying amounts of accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying amounts of our short–term credit obligations approximate fair value because the effective yields on these

obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of common stock and warrants, are comparable to rates of returns for instruments of similar credit risk.

See Note 17 – Equity for details related to accrued compensation liability being fair valued using Level 1 inputs.

Income Taxes

The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Tax benefits claimed or expected to be claimed on a tax return are recorded in the Company’s financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Uncertain tax positions have had no impact on the Company’s financial condition, results of operations or cash flows. The Company does not expect any significant changes in its unrecognized tax benefits within years of the reporting date.

The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as Sales, general and administrative expenses in the Unaudited Condensed Consolidated Statements of Operations.

Stock-Based Compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally recorded on the grant date and re-measured on financial reporting dates and vesting dates until the service period is complete. The fair value amount of the award is then recognized over the period services are required to be provided in exchange for the award, usually the vesting period.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires companies to recognize lease liabilities and corresponding right-of-use leased assets on the Balance Sheets and to disclose key information about leasing arrangements. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2021, with early adoption permitted.

Additionally, in 2018 and 2019, the FASB issued the following Topic 842–related ASUs:

•ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, which clarifies the applicability of Topic 842 to land easements and provides an optional transition practical expedient for existing land easements;

•ASU 2018-10, Codification Improvements to Topic 842, Leases, which makes certain technical corrections to Topic 842;

•ASU 2018-11, Leases (Topic 842): Targeted Improvements, which allows companies to adopt Topic 842 without revising comparative period reporting or disclosures and provides an optional practical expedient to lessors to not separate lease and non-lease components of a contract if certain criteria are met; and

•ASU 2019-01, Leases (Topic 842): Codification Improvements, which provides guidance for certain lessors on determining the fair value of an underlying asset in a lease and on the cash flow statement presentation of lease payments received; ASU No. 2019-01 also clarifies disclosures required in interim periods after adoption of ASU No. 2016-02 in the year of adoption.

The Company adopted Topic 842 as of January 1, 2022 and recognized a cumulative-effect adjustment to the opening balance of accumulated deficit of $15.0 thousand as of the adoption date, and recognized an additional $7.8 thousand during the second quarter of 2022, based on updated information on two of our leases, for an aggregate cumulative-effect adjustment to accumulated deficit of $22.8 thousand. See Note 11 – Leases for further details.

In October 2021, the FASB issued ASU 2021-08 Business Combinations (“Topic 805”): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers”, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The adoption of this guidance did not have a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements and related disclosures.

Subsequent Events

The Company evaluated events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation and transactions, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Financial Statements, except as disclosed in Note 19 – Subsequent events

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Loans Receivable

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Loans Receivable

3.    Loans Receivable

The Company had no loan receivable balance at March 31, 2023 and December 31, 2022. Loans receivable include loans to franchisees totaling, in the aggregate, net of reserves for uncollectible loans. There were no reserves for uncollectible loans at March 31, 2023 and $0.1 million at March 31, 2022. Loans receivable were paid in full during the third quarter of 2022 and the corresponding reserve for loan loss was reversed.

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Prepaid Expenses and Other Current Assets

3 Months Ended

Mar. 31, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Current Assets

4.    Prepaid Expenses and Other Current Assets

At March 31, 2023 and December 31, 2022, the Company’s prepaid expenses and other current assets consists of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Prepaid expenses	189	89
Other receivables	17	228
Prepaid and Other Current Assets	206	317

Included in prepaid and other current assets is a receivable of $17.0 thousand and $0.2 million as of March 31, 2023 and December 31, 2022, respectively. The receivable reduced Labor expense for 2021 included in Restaurant operating expenses, related to the employee retention tax credits receivable from the Internal Revenue Services (“IRS”) that was made available to companies effected by COVID-19. The Company started to early access the credit in the fourth quarter of 2021 as allowed by the IRS.

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Deposit On Farmland

3 Months Ended

Mar. 31, 2023

Deposit Assets [Abstract]

Deposit On Farmland

5.    Deposit On Farmland

At December 31, 2022, the Company's deposit on farmland balance was $4.9 million. At March 31, 2023, the Company gave an additional $0.1 million deposit, totaling $5.0 million deposit on farmland balance. Deposit on farmland consists of

funds paid as a deposit with the intent to acquire farmland in Africa by our Sadot subsidiary. The Company has entered into a letter of intent with a deposit to purchase undeveloped farmland. The Company is still in final negotiations with the intent to finalize the agreement by the end of the second quarter of 2023.

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Property and Equipment, Net

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

6.    Property and Equipment, Net

As of March 31, 2023 and December 31, 2022, Property and equipment consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Furniture and equipment	1,312	1,266
Vehicles	55	55
Leasehold improvements	2,102	2,062
Construction in process	27	5
Property and equipment, gross	3,496	3,388
Less: accumulated depreciation	(1,816)	(1,493)
Property and equipment, net	1,680	1,895

Depreciation expense amounted to $0.3 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023 there were no write off's related to Property and equipment. For the three months ended March 31, 2022, the Company wrote off Property and equipment with an original cost value of $0.4 million, related to closed locations and future locations that were terminated due to the economic environment as a result of COVID-19 and increased Labor and Food cost and recorded a loss on disposal of $0.2 million, after accumulated depreciation of $0.1 million, in the Unaudited Condensed Consolidated Statement of Operations.

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Goodwill and Other Intangible Assets, Net

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets, Net

7.    Goodwill and Other Intangible Assets, Net

The Company’s intangible assets include trademarks, franchisee agreements, franchise license, domain names, customer list, proprietary recipes and non-compete agreements. Intangible assets are amortized over useful lives ranging from 2 to 13 years.

A summary of the intangible assets is presented below:

	Intangible assets, net at December 31, 2021	Impairment of intangible assets	Amortization expense	Intangible assets, net at March 31, 2022	Intangible assets, net at December 31, 2022	Impairment of intangible assets	Amortization expense	Intangible assets, net at March 31, 2023
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Trademark Muscle Maker Grill	1,526	—	(125)	1,401	670	—	(83)	587
Franchise Agreements Muscle Maker Grill	162	—	(6)	156	136	—	(7)	129
Trademark SuperFit	38	—	(2)	36	29	—	(2)	27
Domain Name SuperFit	106	—	(6)	100	81	—	(6)	75
Customer List SuperFit	118	—	(7)	111	90	—	(7)	83
Proprietary Recipes SuperFit	135	—	(8)	127	103	—	(8)	95
Non-Compete Agreement SuperFit	193	—	(21)	172	107	—	(21)	86
Trademark Pokemoto	153	—	(9)	144	118	—	(9)	109
Franchisee License Pokemoto	2,599	—	(68)	2,531	2,322	—	(68)	2,254
Proprietary Recipes Pokemoto	1,028	—	(40)	988	867	—	(40)	827
Non-Compete Agreement Pokemoto	328	—	(59)	269	88	—	(59)	29
	6,386	—	(351)	6,035	4,611	—	(310)	4,301

Amortization expense related to intangible assets was $0.3 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively.

The estimated future amortization expense is as follows:

	Three Months Ended March 31,
	2024	2025	2026	2027	2028	Thereafter	Total
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Trademark Muscle Maker Grill	252	335	—	—	—	—	587
Franchise Agreements Muscle Maker Grill	20	27	27	27	27	1	129
Trademark SuperFit	7	9	9	2	—	—	27
Domain Name SuperFit	19	25	25	6	—	—	75
Customer List SuperFit	21	28	28	6	—	—	83
Proprietary Recipes SuperFit	24	32	32	7	—	—	95
Non-Compete Agreement SuperFit	65	21	—	—	—	—	86
Trademark Pokemoto	26	35	35	13	—	—	109
Franchisee License Pokemoto	209	278	277	277	277	936	2,254
Proprietary Recipes Pokemoto	122	162	161	161	161	60	827
Non-Compete Agreement Pokemoto	29	—	—	—	—	—	29
	794	952	594	499	465	997	4,301

The Company determined that no impairment testing of the Company’s intangible assets was required as of March 31, 2023. Therefore, no impairment charge was recorded.

A summary of the goodwill assets is presented below:

	Muscle Maker Grill	Pokemoto	SuperFit Food	Total
	$’000	$’000	$’000	$’000
Goodwill, net at December 31 2021	570	1,798	258	2,626
Impairment of goodwill	—	—	—	—
Goodwill, net at March 31, 2022	570	1,798	258	2,626
Goodwill, net at December 31 2022	570	1,798	258	2,626
Impairment of goodwill	—	—	—	—
Goodwill, net at March 31, 2023	570	1,798	258	2,626

The Company determined that no impairment testing of the Company’s goodwill was required as of March 31, 2023. Therefore, no impairment charge was recorded.

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Accounts Payables and Accrued Expenses

3 Months Ended

Mar. 31, 2023

Payables and Accruals [Abstract]

Accounts Payables and Accrued Expenses

8.    Accounts Payables and Accrued Expenses

Accounts payables and accrued expenses consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Accounts payable	699	1,085
Accrued payroll and bonuses	102	551
Accrued expenses	102	87
Accrued professional fees	73	185
Accounts payable commodities	34,830	—
Sales taxes payable (1)	57	45
	35,863	1,953

(1)See Note 15 – Commitments and contingencies for details related to delinquent sales taxes.

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Accrued Stock-Based Consulting Expenses Due to Related Party

3 Months Ended

Mar. 31, 2023

Accrued Stock-based Consulting Expenses

Accrued Stock-Based Consulting Expenses Due to Related Party

9.    Accrued Stock-Based Consulting Expenses Due to Related Party

At March 31, 2023, Accrued stock-based consulting expenses due to related party was $3.4 million. At December 31, 2022, Accrued stock-based consulting expenses was $3.6 million. Accrued stock-based consulting expenses are related to consulting fees due to our newly established related party, Aggia, for Sadot operations. See Note 18 – Related party transactions for details. Based on the servicing agreement with Aggia, the consulting fees are calculated at approximately 80.0% of the Net income generated by the Sadot business segment. For the three months ended March 31, 2023, $3.4 million are also recorded as Stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Statements of Operations. The Stock-based consulting expense that is due to related party is expected to be paid in stock in 2023.

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Notes Payable

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Notes Payable

10.    Notes Payable

Convertible Notes Payable

On April 6, 2018, the Company issued a $0.5 million convertible promissory note (the “2018 ARH Note”) to the Former Parent for services rendered and expense paid on behalf of the Company. The 2018 ARH Note has no stated interest rate or maturity date and is convertible into shares of the Company’s common stock at a conversion price of $3.50 per share at a time to be determined by the lender.

On April 11, 2018, the Former Parent elected to partially convert the 2018 ARH Note for the principal of $0.4 million into 0.1 million shares of the Company’s common stock.

The Company had an aggregate gross amount of $0.1 million and $0.1 million of convertible notes payable as of March 31, 2023 and December 31, 2022 included in notes payable on the Unaudited Condensed Consolidated Balance Sheets.

Other Notes Payable

During the three months ended March 31, 2023 and 2022, the Company repaid a total amount of $0.1 million and $1.3 million, respectively, of the other notes payable.

As of March 31, 2023, the Company had an aggregate amount of $0.9 million in other notes payable. The notes had interest rates ranging between 3.75% - 8.00% per annum, due on various dates through May 2027.

The maturities of notes payable as of March 31, 2023, are as follows:

	Principal Amount
	$’000
2023	225
2024	121
2025	70
2026	531
Thereafter	—
	947

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Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases

11.    Leases

The Company’s leases consist of restaurant locations. We determine if a contract contains a lease at inception. The leases generally have remaining terms of 1-10 years and most leases included the option to extend the lease for an additional 5 years.

The total lease cost associated with right of use assets and operating lease liabilities for the three months ended March 31, 2023, was $0.1 million and has been recorded in the Unaudited Condensed Consolidated Statement of Operations as Rent expense within Restaurant operating expenses.

The assets and liabilities related to the Company’s leases were as follows:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Assets
Right to use asset	2,189	2,433
Liabilities
Operating leases – current	505	560
Operating leases – non-current	1,800	2,019
Total lease liabilities	2,305	2,579

The table below presents the future minimum lease payments under the noncancellable operating leases as of March 31, 2023:

	Operating Leases
	$’000
Fiscal Year:
2023	565
2024	706
2025	556
2026	386
2027	300
2028	222
Thereafter	368
Total lease payments	3,103
Less imputed interest	(798)
Present value of lease liabilities	2,305

The Company’s lease term and discount rates were as follows:

	As of March 31, 2023
Weighted-average remaining lease term (in years)
Operating leases	5.01
Weighted-average discount rate
Operating leases	12.0	%

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Deferred Revenue

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Deferred Revenue

12.    Deferred Revenue

The Company's deferred revenue consists of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Deferred revenues, net	1,318	1,371
Less: deferred revenue, current	(90)	(95)
Deferred revenues, non-current	1,228	1,276

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Other Current Liabilities

3 Months Ended

Mar. 31, 2023

Other Liabilities Disclosure [Abstract]

Other Current Liabilities

13.    Other Current Liabilities

Other current liabilities consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Gift card liability	26	25
Co-op advertising fund liability	87	79
Marketing development brand liability	41	35
Advertising fund liability	41	43
	195	182

See Note 2 – Significant accounting policies for details related to the gift card liability and advertising fund liability.

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Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

14.    Income Taxes

The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of March 31, 2023 and December 31, 2022 are presented below:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Deferred tax assets:
Net operating loss carryforwards	10,693	10,615
Receivable allowance	6	5
Stock-based compensation	313	15
Intangible assets	38	314
Deferred revenues	273	204
Leases	25	32
Gross deferred tax asset	11,348	11,185
Deferred tax liabilities:
Property and equipment	(103)	(160)
Gross deferred tax liabilities	(103)	(160)
Net deferred tax assets	11,246	11,025
Valuation allowance	(11,246)	(11,025)
Net deferred tax asset, net of valuation allowance	—	—

The income tax expense for the periods shown consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Federal:
Current	—	—
Deferred	—	—
State and local:
Current	3	25
Deferred	—	—
	3	25
Change in valuation allowance	—	—
Income tax expense	3	25

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the periods shown, are as follows:

	As of
	March 31, 2023		December 31, 2022
Federal income tax benefit at statutory rate	21.0	%	21.0	%
State income tax benefit, net of federal impact	(0.2)	%	(0.5)	%
Permanent differences	(1.9)	%	(0.1)	%
PPP loan forgiveness	—	%	0.4	%
Return to provision adjustments	—	%	3.3	%
Deferred tax asset true up- State	—	%	(14.5)	%
Deferred tax asset true up- Federal	—	%	(6.8)	%
Other	0.1	%	—	%
Change in valuation allowance	(20.7)	%	(3.3)	%
Effective income tax rate	(1.7)	%	(0.5)	%

The Company has filing obligations in what it considers its U.S. major tax jurisdictions as follows: Nevada, California, Connecticut, Florida, New Jersey, Texas, Virginia, New York State and New York City. The earliest year that the Company is subject to examination is the year ended December 31, 2015.

The Company has approximately $63.6 million of Federal and State Net operating loss (“NOLs”) available to offset future taxable income. The net operating loss carryforwards generated prior to 2018, if not utilized, will expire from 2035 to 2037 for federal and state purposes.

As of March 31, 2023 and December 31, 2022, the Company has determined that it is more likely than not that the Company will not recognize the future tax benefit of the loss carryforwards and has recognized a valuation allowance of $11.2 million and $11.0 million, respectively. The valuation allowance increased by approximately $0.2 million.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. Generally, in addition to certain entity reorganizations, the limitation applies when one or more “5 percent stockholders” increase their ownership, in the aggregate, by more than 50 percentage points over a 36-month time period testing period or beginning the day after the most recent ownership change, if shorter.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

15.    Commitments and Contingencies

Consulting Agreements

On November 14, 2022 (the “Effective Date”), the Company, Sadot and Aggia entered into a Services Agreement (the “Services Agreement”) whereby Sadot engaged Aggia to provide certain advisory services to Sadot for creating, acquiring and managing Sadot’s business of wholesaling food and engaging in the purchase and sale of physical food commodities.

As consideration for Aggia providing the services to Sadot, the Company agreed to issue shares of common stock of the Company, par value $0.0001 per share, to Aggia subject to Sadot generating net income measured on a quarterly basis at per share price of $1.5625, subject to equitable adjustments for any combinations or splits of the common stock occurring following the Effective Date. Upon Sadot generating net income for any fiscal quarter, the Company shall issue Aggia a number of shares of common stock equal to the net income for such fiscal quarter divided by the per share price (the “Shares”). The Company may only issue authorized, unreserved shares of common stock. The Company will not issue Aggia in excess of 14.4 million shares representing 49.9% of the number of issued and outstanding shares of common stock as of the Effective Date. Further, once Aggia has been issued a number of shares constituting 19.99% of the issued and outstanding shares of common stock of the Company, no additional shares shall be issued to Aggia unless and until this transaction has been approved by the shareholders of the Company. The shareholders approved the Services Agreement on February 28, 2023. In the event that the shares cap has been reached, then the remaining portion of the net income, if any, not issued as shares shall accrue as debt payable by Sadot to Aggia until such debt has reached a maximum of $71.5 million. The Company will prepare the shares earned calculation after the annual audit or quarter review is completed by the auditors. The shares will be issued within 10 days of the final calculation.

Additionally, for the three months ended March 31, 2023, the Company reimbursed Aggia for all operating costs related to Sadot including labor, operating and general administrative expenses of $0.6 million, $0.2 million and $0.1 million, respectively.

Franchising

During the three months ended March 31, 2023 and 2022, the Company entered into various Pokemoto franchise agreements for a total of 5 and 11, respectively, potentially new Pokemoto locations with various franchisees. The Franchisees paid the Company an aggregate of $0.1 million and $0.2 million and this has been recorded in deferred revenue as of March 31, 2023 and 2022, respectively.

Master Franchise Agreement

On October 25, 2021, Muscle Maker Development International LLC (“MMDI”), a wholly-owned subsidiary of Muscle Maker Inc., entered into a Master Franchise Agreement (the “Master Franchise Agreement”) with Almatrouk Catering Company – OPC (“ACC”) providing ACC with the right to grant franchises for the development of 40 “Muscle Maker Grill” restaurants through December 31, 2030 (the “Term”) in the Kingdom of Saudi Arabia (“KSA”).

Under the Master Franchise Agreement, MMDI has granted to ACC an exclusive right to establish and operate Muscle Maker restaurants in the KSA. MMDI will not own or operate restaurants in KSA, grant franchises for the restaurants in KSA, or grant Master Franchise Rights for the restaurants to other persons within the KSA. ACC will be solely responsible for the development, sales, marketing, operations, distribution and training of all franchise locations sold in the KSA.

ACC is required to pay MMDI $0.2 million pursuant to the Master Franchise Agreement upon the occurrence of various events. ACC is required to pay MMDI $20.0 thousand upon the execution of each franchise agreement for each individual restaurant and a monthly royalty fee of $1.0 thousand for each restaurant. Further, ACC is to adhere to the agreed upon development schedule as outlined in the master franchise agreement. An initial $20.0 thousand deposit was paid on the agreement and no other amount is due at this time. ACC has not performed against this agreement.

Taxes

The Company failed in certain instances in paying past state and local sales taxes collected from customers in specific states that impose a tax on sales of the Company’s products during 2017 and 2018. As of the second quarter 2022, all past

due tax on sales from 2017 and 2018 has been paid in full. The Company had accrued a sales tax liability for approximately $0.1 million and $44.6 thousand as of March 31, 2023, and December 31, 2022, respectively. All current state and local sales taxes from January 1, 2018, for open Company-owned locations have been fully paid and in a timely manner. The Company has completed all the payment plans with the various state or local entities for these past owed amounts.

Litigations, Claims and Assessments

On April 24, 2022, the Company and a convertible note holder entered into an agreement in which the Company will repay a total of $0.1 million in connection with the default judgement issued on June 22, 2018, by the Iowa District Court for Polk County #CVCV056029, filed against the Company for failure to pay the remaining balance due on a promissory note in the amount of $0.1 million, together with interest, attorney fees and other costs of $0.2 million. The Company agreed to pay $40.0 thousand on or before May 1, 2022 and to make seven installment payments of $10.0 thousand per month starting on or before June 1, 2022. As of December 30, 2022, the Company had paid this note in full.

On or about March 7, 2019, the Company was listed as a defendant to a lawsuit filed by a contractor in the State of Texas in El Paso County #2019DCV0824. The contractor is claiming a breach of contract and is seeking $33.0 thousand in damages for services claimed to be rendered by the contractor. The Company accrued $30.0 thousand for the liability in accounts payable and accrued expenses as of March 31, 2023 and December 31, 2022.

On January 23, 2020, the Company was served a judgment issued by the Judicial Council of California in the amount of $0.1 million for a breach of a lease agreement in Chicago, Illinois, in connection with a Company-owned store that was closed in 2018. As of March 31, 2023 and December 31, 2022, the Company has accrued for the liability in accounts payable and accrued expenses.

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. In the opinion of management after consulting legal counsel, such matters are currently not expected to have a material impact on the Company’s financial statements.

The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements after consulting legal counsel.

Employment Agreements

On November 16, 2022, , the Company entered into an Executive Employment Agreement with Michael Roper (the “Roper Agreement”), which replaced his prior employment agreement. Pursuant to the Roper Agreement, Mr. Roper will continue to be employed as Chief Executive Officer of the Company on an at-will-basis. During the term of the Roper Agreement, Mr. Roper is entitled to a base salary at the annualized rate of $0.4 million. Mr. Roper will be eligible for a discretionary performance bonus to be determined by the Board annually. Further, Mr. Roper will be entitled to an additional bonus of $0.1 million upon the Company obtaining approval of the Shareholder Matters and $25.0 thousand upon the Designated Directors representing a majority of the Board of Directors. If Mr. Roper is terminated for any reason, he will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to exercise any equity compensation rights through the last day of the term applicable to such stock option. If Mr. Roper is terminated by the Company for any reason other than cause or resigns for a good reason, Mr. Roper will be entitled to a severance payment equal to 36 months of salary, which will be reduced to 18 months following the second anniversary of the Roper Agreement, and all equity compensation shall be fully accelerated. In the event the Shareholder Matters are not approved by the shareholders, the Roper Agreement will automatically terminate and the prior employment agreement will again be in full effect.

On March 21, 2023, the Company entered into an Executive Employment Agreement with Jennifer Black (the “Black Agreement”), which replaced her prior employment agreement. Pursuant to the Black Agreement, Ms. Black will continue to be employed as Chief Financial Officer of the Company on an at-will-basis. During the term of the Black Agreement, Ms. Black is entitled to a base salary at the annualized rate of $0.2 million. Ms. Black will be eligible for a discretionary performance bonus up to 50% of her annual salary. Further, Ms. Black will be entitled to an additional bonus of $0.1 million upon the Company obtaining approval of the Shareholder Matters and $25.0 thousand upon the Designated Directors representing a majority of the Board of Directors. If Ms. Black is terminated for any reason, she will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to

exercise any equity compensation rights through the last day of the term applicable to such stock option. If Ms. Black is terminated by the Company for any reason other than cause or resigns for a good reason, Ms. Black will be entitled to a severance payment equal to 36 months of salary, which will be reduced to six months following the second anniversary of the Black Agreement, and all equity compensation shall be fully accelerated. In the event the Shareholder Matters are not approved by the shareholders, the Black Agreement will automatically terminate and the prior employment agreement will again be in full effect.

On November 16, 2022, the Company entered into an Executive Employment Agreement with Kenneth Miller (the “Miller Agreement”), which replaced his prior employment agreement. Pursuant to the Miller Agreement, Mr. Miller will continue to be employed as Chief Operating Officer of the Company on an at-will-basis. During the term of the Miller Agreement, Mr. Miller is entitled to a base salary at the annualized rate of $0.3 million. Mr. Miller will be eligible for a discretionary performance bonus up to 75% of his annual salary. Further, Mr. Miller will be entitled to an additional bonus of $25.0 thousand upon the Designated Directors representing a majority of the Board of Directors. If Mr. Miller is terminated for any reason, he will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to exercise any equity compensation rights through the last day of the term applicable to such stock option. If Mr. Miller is terminated by the Company for any reason other than cause or resigns for a good reason, Mr. Miller will be entitled to a severance payment equal to 36 months of salary, which will be reduced to 12 months following the second anniversary of the Miller Agreement, and all equity compensation shall be fully accelerated. In the event the Shareholder Matters are not approved by the shareholders, the Miller Agreement will automatically terminate and the prior employment agreement will again be in full effect.

On November 16, 2022, the Company entered into an Executive Employment Agreement with Kevin Mohan (the “Mohan Agreement”), which replaced his prior employment agreement. Pursuant to the Mohan Agreement, Mr. Mohan will continue to be employed as Chief Investment Officer of the Company on an at-will-basis. During the term of the Employment Agreement, Mr. Mohan is entitled to a base salary at the annualized rate of $0.2 million. Mr. Mohan will be eligible for a discretionary performance bonus up to 75% of his annual salary. Further, Mr. Mohan will be entitled to an additional bonus of $0.1 million upon the Company obtaining approval of the Shareholder Matters and $25.0 thousand upon the Designated Directors representing a majority of the Board of Directors. If Mr. Mohan is terminated for any reason, he will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to exercise any equity compensation rights through the last day of the term applicable to such stock option. If Mr. Mohan is terminated by the Company for any reason other than cause or resigns for a good reason, Mr. Mohan will be entitled to a severance payment equal to 36 months of salary, which will be reduced to six months following the second anniversary of the Mohan Agreement, and all equity compensation shall be fully accelerated. In the event the Shareholder Matters are not approved by the shareholders, the Mohan Agreement will automatically terminate and the prior employment agreement will again be in full effect.

On November 16, 2022, the Company entered into an Executive Employment Agreement with Aimee Infante (the “Infante Agreement”), which replaced her prior employment agreement. Pursuant to the Infante Agreement, Ms. Infante will continue to be employed as Chief Marketing Officer of the Company on an at-will-basis. During the term of the Infante Agreement, Ms. Infante is entitled to a base salary at the annualized rate of $0.2 million. Ms. Infante will be eligible for a discretionary performance bonus up to 25% of her annual salary. Further, Ms. Infante will be entitled to an additional bonus of $25.0 thousand upon the Designated Directors representing a majority of the Board of Directors. If Ms. Infante is terminated for any reason, she will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to exercise any equity compensation rights through the last day of the term applicable to such stock option. If Ms. Infante is terminated by the Company for any reason other than cause or resigns for a good reason, Ms. Infante will be entitled to a severance payment equal to 36 months of salary, which will be reduced to six months following the second anniversary of the Infante Agreement, and all equity compensation shall be fully accelerated. In the event the Shareholder Matters are not approved by the shareholders, the Infante Agreement will automatically terminate, and the prior employment agreement will again be in full effect.

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Reportable Operating Segments

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Reportable Operating Segments

16.    Reportable Operating Segments

See Note 1 – Business organization and nature of operations for descriptions of our operating segments.

The following table sets forth the results of operations for the relevant segments for the three months ended March 31, 2023:

	For the Three Months Ended March 31, 2023
	Restaurant division	Sadot division	Corporate adj.	Total segments
	$’000	$’000	$’000	$’000
Revenues:
Commodity sales	—	210,366	—	210,366
Company restaurant sales, net of discounts	2,301	—	—	2,301
Franchise royalties and fees	284	—	—	284
Franchise advertising fund contributions	16	—	—	16
Total revenues	2,601	210,366	—	212,967
Operating Costs and Expenses:
Commodity operating expenses:
Commodity cost	—	205,055	—	205,055
Labor	—	620	—	620
Other commodity operating expenses	—	154	—	154
Total commodity operating expenses	—	205,829	—	205,829
Restaurant operating expenses:
Food and beverage costs	839	—	—	839
Labor	880	—	—	880
Rent	274	—	—	274
Other restaurant operating expenses	472	—	—	472
Total restaurant operating expenses	2,465	—	—	2,465
Depreciation and amortization expenses	316	—	317	633
Franchise advertising fund expenses	16	—	—	16
Pre-opening expenses	36	—	—	36
Post-closing expenses	93	—	1	94
Stock-based consulting expenses	—	—	3,359	3,359
Sales, general and administrative expenses	82	286	1,774	2,142
Total costs and expenses	3,008	206,115	5,451	214,574
(Loss) / income from operations	(407)	4,251	(5,451)	(1,607)
Other Income:
Interest income / (expense), net	2	—	1	3
Change in fair value of accrued compensation	—	—	541	541
Total other income, net	2	—	542	544
(Loss) / Income Before Income Tax	(405)	4,251	(4,909)	(1,063)
Income tax	—	—	3	3
Net (loss) / income	(405)	4,251	(4,912)	(1,066)

The following table sets forth the results of operations for the relevant segments for the three months ended March 31, 2022:

	For the Three Months Ended March 31, 2022
	Restaurant division	Sadot division	Corporate adj.	Total segments
	$’000	$’000	$’000	$’000
Revenues:
Company restaurant sales, net of discounts	2,694	—	—	2,694
Franchise royalties and fees	208	—	—	208
Franchise advertising fund contributions	18	—	—	18
Total revenues	2,920	—	—	2,920
Operating Costs and Expenses:
Restaurant operating expenses:
Food and beverage costs	1,026	—	—	1,026
Labor	1,073	—	—	1,073
Rent	340	—	—	340
Other restaurant operating expenses	650	—	—	650
Total restaurant operating expenses	3,089	—	—	3,089
Depreciation and amortization expenses	119	—	357	476
Franchise advertising fund expenses	18	—	—	18
Sales, general and administrative expenses	257	—	1,067	1,324
Total costs and expenses	3,483	—	1,424	4,907
Loss from operations	(563)	—	(1,424)	(1,987)
Other Income:
Other income / (expense)	2	—	(21)	(19)
Interest income / (expense), net	3	—	(21)	(18)
Gain on debt extinguishment	140	—	—	140
Total other income, net	145	—	(42)	103
Loss Before Income Tax	(418)	—	(1,466)	(1,884)
Income tax	—	—	2	2
Net loss	(418)	—	(1,468)	(1,886)

With the creation of our Sadot subsidiary in late 2022, we began to transform from a U.S.-centric restaurant business into a global, food-focused organization with two distinct segments. As a result, we have reevaluated and changed our operating segments during the three months ended March 31, 2023. Previously we split out Muscle Maker Grill, Pokemoto, and SuperFit Foods as their own restaurant operating segments. Since Sadot's operations is primarily in commodities trading and is such a large portion of the Companies business, the Company segregated it into its own segment and combined all restaurant operations into a segment.

The Company will continue to evaluate its operating segments and update as necessary.

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Equity

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Equity

17.    Equity

Stock Option and Stock Issuance Plan

2021 Plan

The Company’s board of directors and shareholders approved and adopted on October 7, 2021 the 2021 Equity Incentive Plan (“2021 Plan”), effective on September 16, 2020 under which stock options and restricted stock may be granted to

officers, directors, employees and consultants in the form of non-qualified stock options, incentive stock-options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. Under the 2021 Plan, the Company reserved 1.5 million shares of common stock for issuance. As of March 31, 2023, 1.2 million shares have been issued and 0.3 million options to purchase shares have been awarded under the 2021 Plan.

2023 Plan

The Company’s board of directors and shareholders approved and adopted on February 28, 2023 the 2023 Equity Incentive Plan (“2023 Plan”) under which stock options and restricted stock may be granted to officers, directors, employees and consultants in the form of non-qualified stock options, incentive stock-options, stock appreciation rights, restricted stock awards, restricted stock Units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. Under the 2023 Plan, the Company reserved 2.5 million shares of common stock for issuance. As of March 31, 2023 no shares have been issued and 68.9 thousand option to purchase shares have been awarded under the 2023 Plan.

Common Stock Issuances

On January 6, 2022, the Company authorized the issuance of an aggregate of 39.6 thousand shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2022. The Company accrued for the liability as of March 31, 2022.

On January 18, 2022, the Company issued an aggregate of 30.0 thousand shares of common stock of the Company to a consultant that assisted with the acquisition of SuperFit Foods and Pokemoto, with an aggregate fair value amount of $15.6 thousand. The Company accrued for the liability as of March 31, 2022.

On March 31, 2022, the Company authorized the issuance of an aggregate of 0.1 million shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2022.

On April 4, 2022, the Company authorized the issuance of 20.0 thousand shares of common stock to a member of the executive team per the employment agreement. The stock was not fully earned until April 4, 2022.

On June 8, 2022, the Company authorized the issuance of 5.0 thousand shares of common stock to a contractor for work done at a Company owned location.

On June 30, 2022, the Company recognized 30.9 thousand shares of common stock for book purpose to reconcile the shares outstanding to the transfer agent report.

On July 14, 2022, the Company authorized the issuance of an aggregate of 0.1 million shares of common stock to the members of the board of directors as compensation earned during the second quarter of 2022.

On October 12, 2022, the Company authorized the issuance of an aggregate of 0.1 million shares of common stock to the members of the board of directors as compensation earned during the third quarter of 2022.

On November 29, 2022, the Company authorized the issuance of an aggregate of 0.4 million shares of common stock in connection with the exercise of pre-funded warrants.

On January 5, 2023, the Company authorized the issuance of an aggregate of 31.3 thousand shares of common stock to the members of the board of directors as compensation earned during the fourth quarter of 2022.

On March 27, 2023, the Company authorized the issuance of 2.8 million shares of common stock to Aggia as consulting fees earned during the fourth quarter of 2022.

Change in fair vale of accrued compensation on the Unaudited Condensed Consolidated Statement of Operations is made up of the difference between the agreed upon issuance price, per the servicing agreement with Aggia and the market price

on the day of issuance. For three months ended March 31, 2023, Change in fair value of accrued compensation was $0.5 million.

Private Placements

On April 7, 2021, the Company entered into a Securities Purchase Agreement with an accredited investor (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) pursuant to which the investor agreed to purchase from the Company for an aggregate purchase price of approximately $10.0 million (i) 1.3 million shares of common stock of the Company (ii) a common stock purchase warrant to purchase up to 4.1 million shares of common stock (the “Common Warrant”) and (iii) a pre-funded common stock purchase warrant to purchase up to 2.9 million shares of common stock (the “pre-funded warrant”). Each share and accompanying common warrant is being sold together at a combined offering price of $2.43 per share and Common Warrant, and each pre-funded warrant and accompanying common warrant is being sold together at a combined offering price of $2.42 per pre-funded warrant and accompanying common warrant. The pre-funded warrant is immediately exercisable, at a nominal exercise price of $0.01 per share, and may be exercised at any time until the pre-funded warrant are fully exercised. The common warrant will have an exercise price of $2.43 per share, are immediately exercisable and will expire 5.5 years from the date of issuance. The Private Placement closed on April 9, 2021.

The Securities Purchase Agreement contains customary representations, warranties and agreements of the Company and the Purchaser and customary indemnification rights and obligations of the parties thereto. Pursuant to the Securities Purchase Agreement, the Company was required to register the resale of the shares and the shares issuable upon exercise of the common warrant and the pre-funded warrant. The Company prepared and filed a registration statement with the Securities and Exchange Commission within 30 days of the date of the Securities Purchase Agreement and to used commercially reasonable efforts to have the registration statement declared effective within 90 days of the closing of the Private Placement.

Pursuant to a placement agency agreement, dated April 6, 2021, between the Company and A.G.P./Alliance Global Partners (the “Placement Agent”) entered into in connection with the Private Offering, the Placement Agent acted as the sole placement agent for the Private Placement and the Company has paid customary placement fees to the Placement Agent, including a cash fee equal to 8.0% of the gross proceeds raised in the Private Placement and a common stock purchase warrant to purchase shares of common stock in an amount equal to 4.0% of the Shares and shares of common stock issuable upon exercise of the warrants sold in the Private Placement, the warrant has an exercise price of $2.916 per share and is exercisable commencing six months from the date of the pricing of the Private Placement for a period of five years after such date. Pursuant to the Placement Agency Agreement, the Company has also agreed to reimburse certain expenses of the placement agent incurred in connection with the Private Placement.

On November 17, 2021, the Company entered into a Securities Purchase Agreement with accredited investors (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) pursuant to which the investors (the “Purchasers”) agreed to purchase from the Company for an aggregate purchase price of approximately $15.0 million (i) 6.8 million shares (the “Shares”) of common stock, par value $0.0001 per share, of the Company (the “common stock”) (ii) a common stock purchase warrant to purchase up to 10.8 million shares of common stock (the “common warrant”) and (iii) a pre-funded common stock purchase warrant to purchase up to 4.1 million shares of common stock (the “pre-funded warrant”). Each share and accompanying common warrant were being sold together at a combined offering price of $1.385 per share and common warrant, and each pre-funded warrant and accompanying Common Warrant is being sold together at a combined offering price of $1.3849 per pre-funded warrant and accompanying common warrant. The pre-funded warrant is immediately exercisable, at a nominal exercise price of $0.0001 per share, and may be exercised at any time until the pre-funded warrant is fully exercised. The common warrant will have an exercise price of $1.385 per share, are immediately exercisable and will expire 5 years from the date of issuance. The Private Placement closed on November 22, 2021.

The Securities Purchase Agreement contains customary representations, warranties and agreements of the Company and the Purchaser and customary indemnification rights and obligations of the parties thereto. Pursuant to the Securities Purchase Agreement, the Company is required to register the resale of the shares and the shares issuable upon exercise of the common warrant and the pre-funded warrant. The Company was required to prepare and file a registration statement with the Securities and Exchange Commission within 30 days of the date of the Securities Purchase Agreement and used

commercially reasonable efforts to have the registration statement declared effective within 90 days of the closing of the Private Placement.

Pursuant to a placement agency agreement, dated November 17, 2021, between the Company and A.G.P./Alliance Global Partners (the “Placement Agent”) entered into in connection with the Private Offering, the Placement Agent acted as the sole placement agent for the Private Placement and the Company has paid customary placement fees to the Placement Agent, including a cash fee equal to 8.0% of the gross proceeds raised in the Private Placement and a common stock purchase warrant to purchase shares of Common Stock in an amount equal to 4.0% of the Shares and shares of common stock issuable upon exercise of the warrants sold in the Private Placement, which warrant has an exercise price of $1.662 per share and is exercisable commencing six months from the date of the pricing of the Private Placement for a period of five years after such date. Pursuant to the Placement Agency Agreement, the Company has also agreed to reimburse certain expenses of the placement agent incurred in connection with the Private Placement. The warrants for the November 17, 2021, private placement for the Placement Agents were issued in the fourth quarter of 2022.

Warrant and Option Valuation

The Company has computed the fair value of warrants granted and options accrued for as accrued compensation expense using the Black-Scholes option pricing model. The expected term used for warrants and options issued to non-employees is the contractual life. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected term of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

Options

On February 27, 2023, the Company issued options to purchase an aggregate of 0.5 million shares of the Company's common stock to officers and directors. The options had an exercise price of $1.51 per share and vest ratably over 20 quarters with the first vesting occurring March 31, 2023.

On March 15, 2023, the Company issued options to purchase 0.1 million shares of the Company's common stock. The options had an exercise price of $1.51 per share and vest ratably over 20 quarters with the first vesting occurring March 31, 2023.

A summary of option activity during the three months ended March 31, 2023 and 2022 is presented below:

	Weighted-average exercise price	Number of options	Weighted-average remaining life (in years)	Aggregate intrinsic value
	$			$’000
Outstanding, December 31, 2021	5.00	100,000	1.90	—
Issued	—	—	N/A	—
Exercised	—	—	N/A	—
Forfeited	—	—	N/A	—
Outstanding, March 31, 2022	5.00	100,000	1.66	—
Exercisable, March 31, 2022	5.00	100,000	1.66	—
Outstanding, December 31, 2022	1.52	412,500	3.56	156
Issued	1.51	600,000	6.17	—
Exercised	—	—	N/A	—
Forfeited	—	—	N/A	—
Outstanding, March 31, 2023	1.52	1,212,500	5.00	206
Exercisable, March 31, 2023	3.00	190,019	1.51	40

The Company has estimated the fair value of the options using the Black-Scholes model using the following assumptions:

	Three Months Ended March 31, 2023
Risk free interest rate	1.53-4.33%
Expected term (years)	5
Expected volatility	59.10-156.87%
Expected dividends	—

Warrants

On January 3, 2022, the Company issued 1.2 million shares of common stock in connection with the cashless exercise of the pre-funded warrants. Pursuant to the terms of the pre-funded warrants a total of 1.2 million warrants were exercised.

On February 24, 2022, the Company issued 1.2 million shares of common stock in connection with the cashless exercise of the pre-funded warrants. Pursuant to the terms of the pre-funded warrants a total of 1.2 million warrants were exercised.

On November 29, 2022, the Company issued 0.4 million shares of common stock in connection with the exercising of pre-funded warrants for $44.

A summary of warrants activity during the three months ended March 31, 2023 and 2022 is presented below:

	Number of Warrants	Weighted-average exercise price		Weighted-average remaining life (in years)
Outstanding, December 31, 2021	20,284,016	$	1.60	4.00
Issued	—	—		N/A
Exercised	(2,410,110)	—		N/A
Forfeited	—	—		N/A
Outstanding, March 31, 2022	17,873,906	$	1.90	4.30
Exercisable, March 31, 2022	17,873,906	$	1.90	4.30
Outstanding, December 31, 2022	18,033,640	$	1.93	3.51
Issued	—	—		N/A
Exercised	—	—		N/A
Forfeited	—	—		N/A
Outstanding, March 31, 2023	18,033,640	$	1.93	3.26
Exercisable, March 31, 2023	18,033,640	$	1.93	3.26

Stock-Based Compensation Expense

Stock-based compensation related to restricted stock issued to employees, directors and consultants, warrants and warrants to consultants amounted to $3.4 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively, of which $58.7 thousand and $0.1 million, respectively, was recorded in Sales, general and administrative expenses. There was $3.4 million recorded in Stock-based consulting expense for the three months ended March 31, 2023. There were no expenses recorded in Stock-based consulting expense for the three months ended March 31, 2022.

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Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

Related Party Transactions

18.    Related Party Transactions

The Company held a Special Meeting on February 28, 2023. Of the 29.3 million shares of Common Stock outstanding on January 19, 2023, the record date, 17.2 million shares were represented at the Special Meeting, in person or by proxy, constituting a quorum. At the meeting, the shareholders approved (i) the Services Agreement whereby Sadot engaged Aggia, to provide certain advisory services to Sadot for managing Sadot’s business of wholesaling food and engaging in the purchase and sale of physical food commodities (the “Sadot Transaction”); (ii) an amendment of the Company’s articles of incorporation to increase the number of authorized shares of common stock from 50.0 million to 150.0 million; (iii) for purposes of complying with NASDAQ Listing Rule 5635(b), the issuance of the Shares pursuant to the Services Agreement entered between the Company, Sadot and Aggia representing more than 20% of our common stock outstanding, which would result in a “change of control” of the Company under applicable Nasdaq listing rules; (iv) for purposes of complying with NASDAQ Listing Rule 5635(c), the issuance of up to 14.4 million Shares of Common Stock to Aggia pursuant to the Services Agreement and net income generated thresholds; (v) the right of Aggia to nominate up to eight directors to the Board of Directors subject to achieving net income thresholds as set forth in the Services Agreement; and (vi) the adoption of the 2023 Equity Incentive Plan.

In April of 2023, MMI recognized a related party relationship between newly appointed directors of the Company and Aggia. As of March 31, 2023, Aggia owned 8.9% of the Company's commons stock. While a related party relationship exists, the amounts recognized during the period are immaterial to the Company's consolidated results.

During the three months ended March 31, 2023, the Company recorded Stock-based consulting expense of $3.4 million to its related party, Aggia for consulting services rendered. As of March 31, 2023 the Company accrued stock-based compensation expense due to related party of $3.4 million.

Additionally, for the three months ended March 31, 2023, the Company reimbursed Aggia for all operating costs related to Sadot including labor, operating and general administrative expenses of $0.6 million, $0.2 million and $0.1 million, respectively.

The Company will continue to monitor and evaluate its related party transactions to ensure that they are conducted in accordance with applicable laws and regulations and in the best interests of the Company and its shareholders.

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Subsequent Events

3 Months Ended

Mar. 31, 2023

Subsequent Events [Abstract]

Subsequent Events

19.    Subsequent Events

Stock Issuance

On April 5, 2023, the Company authorized the issuance of an aggregate of 29.7 thousand shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2023. The Company accrued for the liability as of March 31, 2023.

Appointment of Directors

On April 3, 2023, the Board appointed Marvin Yeo and Paul Sansom to the Board of Directors, effective April 10, 2023.

Repurchase Program

On April 13, 2023, the Company announced that its Board of Directors had approved a share repurchase program. Under the program, the Company is authorized to purchase shares of its common stock with a value of up to $2.0 million in open market transactions at the discretion of management.

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation

of the Unaudited Condensed Consolidated Financial Statements of the Company as of March 31, 2023, and for the three months ended March 31, 2023, and 2022. The results of operations for the three months ended March 31, 2023, and 2022 are not necessarily indicative of the operating results for the full year. It is suggested that these Unaudited Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2022. The Balance Sheet as of December 31, 2022, has been derived from the Company’s audited Financial Statements.

Principles of Consolidation

Principles of Consolidation

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and majority-owned subsidiary. Any intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

Reclassifications

Certain prior period balances have been reclassified in order to conform to current period presentation. These reclassifications have no effect on the previously reported results of operations or loss per share.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant estimates include:

•the assessment of recoverability of long-lived assets, including property and equipment, goodwill and intangible assets;

•the estimated useful lives of intangible and depreciable assets;

•estimates and assumptions used to value warrants and options;

•the recognition of revenue; and

•the recognition, measurement and valuation of current and deferred income taxes.

Estimates and assumptions are periodically reviewed, and the effects of any material revisions are reflected in the financial statements in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly-liquid instruments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of March 31, 2023 or December 31, 2022.

Inventory

Inventory

Inventories, which are stated at the lower of cost or net realizable value, consist primarily of commodity trade shipments in-transit, perishable food items and supplies. Cost is determined using the first-in, first-out method.

Deposit on Farmland

Deposit on FarmlandDeposit on farmland consists of funds paid as a deposit with the intent to acquire farmland in Africa by our Sadot subsidiary. As of March 31, 2023, the Company recorded a deposit of $5.0 million. The Company has entered into a letter of intent with a deposit to purchase undeveloped farmland. The Company is still in final negotiations with the intent to finalize the agreement by the end of the second quarter of 2023.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost less accumulated Depreciation and amortization expenses. Major improvements are capitalized, and minor replacements, maintenance and repairs are charged to expense as incurred. Depreciation and amortization expenses are calculated on the straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful life or the lease term of the related asset. The estimated useful lives are as follows:

Furniture and equipment	3 – 7 years
Leasehold improvements	1 – 11 years

Intangible Assets

Intangible Assets

The Company accounts for recorded intangible assets in accordance with the Accounting Standards Codification (“ASC’) 350 “Intangibles – Goodwill and Other”. In accordance with ASC 350, the Company does not amortize intangible assets having indefinite useful lives. The Company determined that as of January 1, 2022, – the trademark – Muscle Maker had a finite life of 3 years and is amortizing the value over the new estimated life. The Company’s goodwill has an indefinite life and is not amortized, but are evaluated for impairment at least annually, or more often whenever changes in facts and circumstances may indicate that the carrying value may not be recoverable. ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment). Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment.

The useful lives of the Company’s intangible assets are:

Franchisee agreements	13 years
Franchise license	10 years
Trademarks	3 – 5 years
Domain name, Customer list and Proprietary recipes	3 – 7 years
Non-compete agreements	2 – 3 years

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

When circumstances, such as adverse market conditions, indicate that the carrying value of a long-lived asset may be impaired, the Company performs an analysis to review the recoverability of the asset’s carrying value, which includes estimating the undiscounted cash flows (excluding interest charges) from the expected future operations of the asset. These estimates consider factors such as expected future operating income, operating trends and prospects, as well as the effects of demand, competition and other factors. If the analysis indicates that the carrying value is not recoverable from future cash flows, an impairment loss is recognized to the extent that the carrying value exceeds the estimated fair value. Any impairment losses are recorded as operating expenses, which reduce net income.

Convertible Instruments

Convertible Instruments

The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the Financial Accounting Standards Board (“FASB”).

If the instrument is determined not to be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the market price of the Company’s common stock as of the commitment date to the effective conversion price of the instrument.

As of March 31, 2023 and December 31, 2022, the Company deemed the conversion feature was not required to be bifurcated and recorded as a derivative liability.

Related Party Transactions

Related Parties

A party is considered to be related to the Company if the party directly, indirectly, or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Revenue Recognition

Revenue Recognition

The Company’s revenues consist of Commodity sales, Restaurant sales, Franchise royalties and fees, Franchise advertising fund contributions, and Other revenues. The Company recognizes revenues according to Topic 606 of FASB, “Revenue from Contracts with Customers”. Under the guidance, revenue is recognized in accordance with a five-step revenue model, as follows: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when (or as) the entity satisfies a performance obligation. In applying this five-step model, we made significant judgments in identifying the promised goods or services in our contracts with franchisees that are distinct, and which represent separate performance obligations.

Commodity Sales

Commodity sale revenue is generated by our Sadot subsidiary and is recognized when the commodity is delivered as evidenced by the bill of lading and the invoice is prepared and submitted to the customer. During the three months ended March 31, 2023, the Company recorded Commodity sales revenues of $210.4 million. The Company did not have any Commodity sales revenue during the three months ended March 31, 2022.

Restaurant Sales

Retail store revenue at Company-operated restaurants is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales-related taxes. The Company recorded retail store revenues of $2.3 million and $2.7 million during the three months ended March 31, 2023 and 2022, respectively.

The Company sells gift cards which do not have an expiration date, and it does not deduct dormancy fees from outstanding gift card balances. The Company recognizes revenues from gift cards as restaurant revenues once the Company performs its obligation to provide food and beverage to the customer simultaneously with the redemption of the gift card or through gift card breakage, as discussed in Other revenues below.

Franchise Royalties and Fees

Franchise revenues consists of royalties, initial franchise fees and rebates. Royalties are based on a percentage of franchisee net sales revenue. The Company recognizes the royalties as the underlying sales occur. The Company recorded revenue from royalties of $0.2 million and $0.1 million during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company provides the franchisees with management expertise, training, pre-opening assistance, and restaurant operating assistance in exchange for the multi-unit development fees and initial franchise fees. The Company capitalizes these fees upon collection from the franchisee. These initial fees are then recognized as franchise fee revenue on a straight-

line basis over the life of the related franchise agreements and any exercised renewal periods. Cash payments are due upon the execution of the related franchise agreement. The Company’s performance obligation with respect to franchise fee revenues consists of a license to utilize the Company’s brand for a specified period of time, which is satisfied equally over the life of each franchise agreement. If a franchise location closes or a franchise agreement is terminated for any reason, the unrecognized revenue will be recognized in full at that time. The Company recorded revenue from initial franchise fees of $0.1 million and $49.0 thousand during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company has supply agreements with certain food and beverage vendors. Pursuant to the terms of these agreements, rebates are provided to the Company based upon the dollar volume of purchases for all company-owned and franchised restaurants from these vendors. Rebates earned on purchases by franchise stores are recorded as revenue during the period in which the related food and beverage purchases are made. The Company recorded revenue from rebates of $26.0 thousand and $0.1 million during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations. Rebates earned on purchases by Company-owned stores are recorded as a reduction of Food and beverage costs during the period in which the related food and beverage purchases are made.

Franchise Advertising Fund Contributions

Under the Company’s franchise agreements, the Company and its franchisees are required to contribute a certain percentage of revenues to a national advertising fund. The Company’s national advertising services are provided on a system-wide basis and therefore, not considered distinct performance obligations for individual franchisees. In accordance with Topic 606, the Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense. The Company records the related advertising expenses as incurred under Sales, general and administrative expenses. When an advertising contribution fund is over-spent at year-end, advertising expenses will be reported on the Unaudited Condensed Consolidated Statement of Operations in an amount that is greater than the revenue recorded for advertising contributions. Conversely, when an advertising contribution fund is under-spent at a period-end, the Company will accrue advertising costs up to advertising contributions recorded in revenue. The Company recorded contributions from franchisees of $16.0 thousand and $18.0 thousand, respectively, during the three months ended March 31, 2023 and 2022, which are included in Franchise advertising fund contributions on the accompanying Unaudited Condensed Consolidated Statements of Operations.

Other Revenues

Gift card breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote and the Company determines there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction. The determination of the gift card breakage rate is based upon the Company’s specific historical redemption patterns. Gift card liability is recorded in other current liabilities on the Unaudited Condensed Consolidated Balance Sheets.

Deferred Revenue

Deferred revenue primarily includes initial franchise fees received by the Company, which are being amortized over the life of the Company’s franchise agreements. Deferred revenue is recognized in income over the life of the franchise agreements. If a franchise location closes or a franchise agreement is terminated for any reason, the remaining deferred revenue will be recognized in full at that time.

Stock-Based Consulting Expense

Stock-Based Consulting Expense

Stock-based consulting expenses are for consulting fees due to Aggia related to ongoing Sadot operations and expansion of the global agri-commodities business. Based on the servicing agreement with Aggia LLC FZ, a Company formed under the laws of United Arab Emirates (“Aggia”), the consulting fees are calculated at approximately 80.0% of the Net Income generated by the Sadot business segment. For the three months ended March 31, 2023, $3.4 million is recorded as Stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Statements of Operations and a corresponding liability is recorded as Accrued stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Balance Sheets. This expense is expected to be paid in stock in 2023.

Advertising

Advertising

Advertising costs are charged to expense as incurred. Advertising costs were $0.1 million and $33.0 thousand for the three months ended March 31, 2023 and 2022, respectively, are included in Sales, general and administrative expenses and $40.0 thousand and $0.1 million, respectively, are included in Other restaurant operating expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations.

Net Loss per Share

Net Loss per Share

Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of potential common shares, if dilutive, resulting from the exercise of warrants, options or the conversion of convertible notes payable.

The following securities are excluded from the calculation of weighted average diluted common shares at March 31, 2023 and 2022, respectively, because their inclusion would have been anti-dilutive:

	March 31,
	2023	2022
	('000	('000
Warrants	18,034	17,874
Options	1,013	100
Convertible debt	24	32
Total potentially dilutive shares	19,071	18,006

Major Vendor

Major Vendor

The Company engages various vendors to purchase commodities for resale and distribute food products to their Company-owned restaurants. Purchases from the Company’s three largest commodity suppliers totaled 98% of the Company’s purchases for the three months ended March 31, 2023. Purchases from the Company’s largest food products supplier totaled 45% of the Company’s purchases for the three months ended March 31, 2022.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of the FASB Accounting ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”).

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities.

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The carrying amounts of accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying amounts of our short–term credit obligations approximate fair value because the effective yields on these

obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of common stock and warrants, are comparable to rates of returns for instruments of similar credit risk.

See Note 17 – Equity for details related to accrued compensation liability being fair valued using Level 1 inputs.

Income Taxes

Income Taxes

The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Tax benefits claimed or expected to be claimed on a tax return are recorded in the Company’s financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Uncertain tax positions have had no impact on the Company’s financial condition, results of operations or cash flows. The Company does not expect any significant changes in its unrecognized tax benefits within years of the reporting date.

The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as Sales, general and administrative expenses in the Unaudited Condensed Consolidated Statements of Operations.

Stock-Based Compensation

Stock-Based Compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally recorded on the grant date and re-measured on financial reporting dates and vesting dates until the service period is complete. The fair value amount of the award is then recognized over the period services are required to be provided in exchange for the award, usually the vesting period.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires companies to recognize lease liabilities and corresponding right-of-use leased assets on the Balance Sheets and to disclose key information about leasing arrangements. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2021, with early adoption permitted.

Additionally, in 2018 and 2019, the FASB issued the following Topic 842–related ASUs:

•ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, which clarifies the applicability of Topic 842 to land easements and provides an optional transition practical expedient for existing land easements;

•ASU 2018-10, Codification Improvements to Topic 842, Leases, which makes certain technical corrections to Topic 842;

•ASU 2018-11, Leases (Topic 842): Targeted Improvements, which allows companies to adopt Topic 842 without revising comparative period reporting or disclosures and provides an optional practical expedient to lessors to not separate lease and non-lease components of a contract if certain criteria are met; and

•ASU 2019-01, Leases (Topic 842): Codification Improvements, which provides guidance for certain lessors on determining the fair value of an underlying asset in a lease and on the cash flow statement presentation of lease payments received; ASU No. 2019-01 also clarifies disclosures required in interim periods after adoption of ASU No. 2016-02 in the year of adoption.

The Company adopted Topic 842 as of January 1, 2022 and recognized a cumulative-effect adjustment to the opening balance of accumulated deficit of $15.0 thousand as of the adoption date, and recognized an additional $7.8 thousand during the second quarter of 2022, based on updated information on two of our leases, for an aggregate cumulative-effect adjustment to accumulated deficit of $22.8 thousand. See Note 11 – Leases for further details.

In October 2021, the FASB issued ASU 2021-08 Business Combinations (“Topic 805”): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers”, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The adoption of this guidance did not have a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements and related disclosures.

Subsequent Events

Subsequent EventsThe Company evaluated events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation and transactions, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Financial Statements, except as disclosed in Note 19 – Subsequent events

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Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Schedule of Property and Equipment

Furniture and equipment	3 – 7 years
Leasehold improvements	1 – 11 years

As of March 31, 2023 and December 31, 2022, Property and equipment consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Furniture and equipment	1,312	1,266
Vehicles	55	55
Leasehold improvements	2,102	2,062
Construction in process	27	5
Property and equipment, gross	3,496	3,388
Less: accumulated depreciation	(1,816)	(1,493)
Property and equipment, net	1,680	1,895

Schedule of Finite-Lived Intangible Assets

The useful lives of the Company’s intangible assets are:

Franchisee agreements	13 years
Franchise license	10 years
Trademarks	3 – 5 years
Domain name, Customer list and Proprietary recipes	3 – 7 years
Non-compete agreements	2 – 3 years

Antidilutive Securities Excluded from Computation of Earnings Per Share

The following securities are excluded from the calculation of weighted average diluted common shares at March 31, 2023 and 2022, respectively, because their inclusion would have been anti-dilutive:

	March 31,
	2023	2022
	('000	('000
Warrants	18,034	17,874
Options	1,013	100
Convertible debt	24	32
Total potentially dilutive shares	19,071	18,006

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Prepaid Expenses and Other Current Assets (Tables)

3 Months Ended

Mar. 31, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

At March 31, 2023 and December 31, 2022, the Company’s prepaid expenses and other current assets consists of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Prepaid expenses	189	89
Other receivables	17	228
Prepaid and Other Current Assets	206	317

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Property and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Furniture and equipment	3 – 7 years
Leasehold improvements	1 – 11 years

As of March 31, 2023 and December 31, 2022, Property and equipment consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Furniture and equipment	1,312	1,266
Vehicles	55	55
Leasehold improvements	2,102	2,062
Construction in process	27	5
Property and equipment, gross	3,496	3,388
Less: accumulated depreciation	(1,816)	(1,493)
Property and equipment, net	1,680	1,895

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Goodwill and Other Intangible Assets, Net (Tables)

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill

A summary of the intangible assets is presented below:

	Intangible assets, net at December 31, 2021	Impairment of intangible assets	Amortization expense	Intangible assets, net at March 31, 2022	Intangible assets, net at December 31, 2022	Impairment of intangible assets	Amortization expense	Intangible assets, net at March 31, 2023
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Trademark Muscle Maker Grill	1,526	—	(125)	1,401	670	—	(83)	587
Franchise Agreements Muscle Maker Grill	162	—	(6)	156	136	—	(7)	129
Trademark SuperFit	38	—	(2)	36	29	—	(2)	27
Domain Name SuperFit	106	—	(6)	100	81	—	(6)	75
Customer List SuperFit	118	—	(7)	111	90	—	(7)	83
Proprietary Recipes SuperFit	135	—	(8)	127	103	—	(8)	95
Non-Compete Agreement SuperFit	193	—	(21)	172	107	—	(21)	86
Trademark Pokemoto	153	—	(9)	144	118	—	(9)	109
Franchisee License Pokemoto	2,599	—	(68)	2,531	2,322	—	(68)	2,254
Proprietary Recipes Pokemoto	1,028	—	(40)	988	867	—	(40)	827
Non-Compete Agreement Pokemoto	328	—	(59)	269	88	—	(59)	29
	6,386	—	(351)	6,035	4,611	—	(310)	4,301

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The estimated future amortization expense is as follows:

	Three Months Ended March 31,
	2024	2025	2026	2027	2028	Thereafter	Total
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Trademark Muscle Maker Grill	252	335	—	—	—	—	587
Franchise Agreements Muscle Maker Grill	20	27	27	27	27	1	129
Trademark SuperFit	7	9	9	2	—	—	27
Domain Name SuperFit	19	25	25	6	—	—	75
Customer List SuperFit	21	28	28	6	—	—	83
Proprietary Recipes SuperFit	24	32	32	7	—	—	95
Non-Compete Agreement SuperFit	65	21	—	—	—	—	86
Trademark Pokemoto	26	35	35	13	—	—	109
Franchisee License Pokemoto	209	278	277	277	277	936	2,254
Proprietary Recipes Pokemoto	122	162	161	161	161	60	827
Non-Compete Agreement Pokemoto	29	—	—	—	—	—	29
	794	952	594	499	465	997	4,301

Schedule of Goodwill

A summary of the goodwill assets is presented below:

	Muscle Maker Grill	Pokemoto	SuperFit Food	Total
	$’000	$’000	$’000	$’000
Goodwill, net at December 31 2021	570	1,798	258	2,626
Impairment of goodwill	—	—	—	—
Goodwill, net at March 31, 2022	570	1,798	258	2,626
Goodwill, net at December 31 2022	570	1,798	258	2,626
Impairment of goodwill	—	—	—	—
Goodwill, net at March 31, 2023	570	1,798	258	2,626

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Accounts Payables and Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2023

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

Accounts payables and accrued expenses consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Accounts payable	699	1,085
Accrued payroll and bonuses	102	551
Accrued expenses	102	87
Accrued professional fees	73	185
Accounts payable commodities	34,830	—
Sales taxes payable (1)	57	45
	35,863	1,953

(1)See Note 15 – Commitments and contingencies for details related to delinquent sales taxes.

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Notes Payable (Tables)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Schedule of Debt

The maturities of notes payable as of March 31, 2023, are as follows:

	Principal Amount
	$’000
2023	225
2024	121
2025	70
2026	531
Thereafter	—
	947

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Leases (Tables)

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Assets And Liabilities, Lessee

The assets and liabilities related to the Company’s leases were as follows:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Assets
Right to use asset	2,189	2,433
Liabilities
Operating leases – current	505	560
Operating leases – non-current	1,800	2,019
Total lease liabilities	2,305	2,579

Lessee, Operating Lease, Liability, Maturity

The table below presents the future minimum lease payments under the noncancellable operating leases as of March 31, 2023:

	Operating Leases
	$’000
Fiscal Year:
2023	565
2024	706
2025	556
2026	386
2027	300
2028	222
Thereafter	368
Total lease payments	3,103
Less imputed interest	(798)
Present value of lease liabilities	2,305

Lease, Cost

The Company’s lease term and discount rates were as follows:

	As of March 31, 2023
Weighted-average remaining lease term (in years)
Operating leases	5.01
Weighted-average discount rate
Operating leases	12.0	%

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Deferred Revenue (Tables)

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Contract with Customer, Contract Asset, Contract Liability, and Receivable

The Company's deferred revenue consists of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Deferred revenues, net	1,318	1,371
Less: deferred revenue, current	(90)	(95)
Deferred revenues, non-current	1,228	1,276

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Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2023

Other Liabilities Disclosure [Abstract]

Other Current Liabilities

Other current liabilities consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Gift card liability	26	25
Co-op advertising fund liability	87	79
Marketing development brand liability	41	35
Advertising fund liability	41	43
	195	182

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of March 31, 2023 and December 31, 2022 are presented below:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Deferred tax assets:
Net operating loss carryforwards	10,693	10,615
Receivable allowance	6	5
Stock-based compensation	313	15
Intangible assets	38	314
Deferred revenues	273	204
Leases	25	32
Gross deferred tax asset	11,348	11,185
Deferred tax liabilities:
Property and equipment	(103)	(160)
Gross deferred tax liabilities	(103)	(160)
Net deferred tax assets	11,246	11,025
Valuation allowance	(11,246)	(11,025)
Net deferred tax asset, net of valuation allowance	—	—

Schedule of Components of Income Tax Expense (Benefit)

The income tax expense for the periods shown consist of the following:

	As of
	March 31, 2023	December 31, 2022
	$’000	$’000
Federal:
Current	—	—
Deferred	—	—
State and local:
Current	3	25
Deferred	—	—
	3	25
Change in valuation allowance	—	—
Income tax expense	3	25

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the periods shown, are as follows:

	As of
	March 31, 2023		December 31, 2022
Federal income tax benefit at statutory rate	21.0	%	21.0	%
State income tax benefit, net of federal impact	(0.2)	%	(0.5)	%
Permanent differences	(1.9)	%	(0.1)	%
PPP loan forgiveness	—	%	0.4	%
Return to provision adjustments	—	%	3.3	%
Deferred tax asset true up- State	—	%	(14.5)	%
Deferred tax asset true up- Federal	—	%	(6.8)	%
Other	0.1	%	—	%
Change in valuation allowance	(20.7)	%	(3.3)	%
Effective income tax rate	(1.7)	%	(0.5)	%

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REPORTABLE OPERATING SEGMENTS (Tables)

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following table sets forth the results of operations for the relevant segments for the three months ended March 31, 2023:

	For the Three Months Ended March 31, 2023
	Restaurant division	Sadot division	Corporate adj.	Total segments
	$’000	$’000	$’000	$’000
Revenues:
Commodity sales	—	210,366	—	210,366
Company restaurant sales, net of discounts	2,301	—	—	2,301
Franchise royalties and fees	284	—	—	284
Franchise advertising fund contributions	16	—	—	16
Total revenues	2,601	210,366	—	212,967
Operating Costs and Expenses:
Commodity operating expenses:
Commodity cost	—	205,055	—	205,055
Labor	—	620	—	620
Other commodity operating expenses	—	154	—	154
Total commodity operating expenses	—	205,829	—	205,829
Restaurant operating expenses:
Food and beverage costs	839	—	—	839
Labor	880	—	—	880
Rent	274	—	—	274
Other restaurant operating expenses	472	—	—	472
Total restaurant operating expenses	2,465	—	—	2,465
Depreciation and amortization expenses	316	—	317	633
Franchise advertising fund expenses	16	—	—	16
Pre-opening expenses	36	—	—	36
Post-closing expenses	93	—	1	94
Stock-based consulting expenses	—	—	3,359	3,359
Sales, general and administrative expenses	82	286	1,774	2,142
Total costs and expenses	3,008	206,115	5,451	214,574
(Loss) / income from operations	(407)	4,251	(5,451)	(1,607)
Other Income:
Interest income / (expense), net	2	—	1	3
Change in fair value of accrued compensation	—	—	541	541
Total other income, net	2	—	542	544
(Loss) / Income Before Income Tax	(405)	4,251	(4,909)	(1,063)
Income tax	—	—	3	3
Net (loss) / income	(405)	4,251	(4,912)	(1,066)

The following table sets forth the results of operations for the relevant segments for the three months ended March 31, 2022:

	For the Three Months Ended March 31, 2022
	Restaurant division	Sadot division	Corporate adj.	Total segments
	$’000	$’000	$’000	$’000
Revenues:
Company restaurant sales, net of discounts	2,694	—	—	2,694
Franchise royalties and fees	208	—	—	208
Franchise advertising fund contributions	18	—	—	18
Total revenues	2,920	—	—	2,920
Operating Costs and Expenses:
Restaurant operating expenses:
Food and beverage costs	1,026	—	—	1,026
Labor	1,073	—	—	1,073
Rent	340	—	—	340
Other restaurant operating expenses	650	—	—	650
Total restaurant operating expenses	3,089	—	—	3,089
Depreciation and amortization expenses	119	—	357	476
Franchise advertising fund expenses	18	—	—	18
Sales, general and administrative expenses	257	—	1,067	1,324
Total costs and expenses	3,483	—	1,424	4,907
Loss from operations	(563)	—	(1,424)	(1,987)
Other Income:
Other income / (expense)	2	—	(21)	(19)
Interest income / (expense), net	3	—	(21)	(18)
Gain on debt extinguishment	140	—	—	140
Total other income, net	145	—	(42)	103
Loss Before Income Tax	(418)	—	(1,466)	(1,884)
Income tax	—	—	2	2
Net loss	(418)	—	(1,468)	(1,886)

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Equity (Tables)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Schedule of Option Activity

A summary of option activity during the three months ended March 31, 2023 and 2022 is presented below:

	Weighted-average exercise price	Number of options	Weighted-average remaining life (in years)	Aggregate intrinsic value
	$			$’000
Outstanding, December 31, 2021	5.00	100,000	1.90	—
Issued	—	—	N/A	—
Exercised	—	—	N/A	—
Forfeited	—	—	N/A	—
Outstanding, March 31, 2022	5.00	100,000	1.66	—
Exercisable, March 31, 2022	5.00	100,000	1.66	—
Outstanding, December 31, 2022	1.52	412,500	3.56	156
Issued	1.51	600,000	6.17	—
Exercised	—	—	N/A	—
Forfeited	—	—	N/A	—
Outstanding, March 31, 2023	1.52	1,212,500	5.00	206
Exercisable, March 31, 2023	3.00	190,019	1.51	40

Schedule of Valuation Assumptions

The Company has estimated the fair value of the options using the Black-Scholes model using the following assumptions:

	Three Months Ended March 31, 2023
Risk free interest rate	1.53-4.33%
Expected term (years)	5
Expected volatility	59.10-156.87%
Expected dividends	—

Schedule of Warrant Activity

A summary of warrants activity during the three months ended March 31, 2023 and 2022 is presented below:

	Number of Warrants	Weighted-average exercise price		Weighted-average remaining life (in years)
Outstanding, December 31, 2021	20,284,016	$	1.60	4.00
Issued	—	—		N/A
Exercised	(2,410,110)	—		N/A
Forfeited	—	—		N/A
Outstanding, March 31, 2022	17,873,906	$	1.90	4.30
Exercisable, March 31, 2022	17,873,906	$	1.90	4.30
Outstanding, December 31, 2022	18,033,640	$	1.93	3.51
Issued	—	—		N/A
Exercised	—	—		N/A
Forfeited	—	—		N/A
Outstanding, March 31, 2023	18,033,640	$	1.93	3.26
Exercisable, March 31, 2023	18,033,640	$	1.93	3.26

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Business Organization and Nature of Operations (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) segment restaurant	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)
Franchisor Disclosure [Line Items]
Number of distinct operating units | segment	2
Cash	$ 6,386		$ 9,898
Working capital surplus (deficiency)	6,400
Retained earnings (accumulated deficit)	(80,421)		$ (79,355)
Pre tax net loss	1,063	$ 1,884
Net cash used in operating activities	$ 3,282	$ 929
Entity Operated Units | Restaurant division
Franchisor Disclosure [Line Items]
Number of restaurants | restaurant	19
Franchised Units | Restaurant division
Franchisor Disclosure [Line Items]
Number of restaurants | restaurant	26

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Significant Accounting Policies - Narrative (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Jun. 30, 2022	Jan. 02, 2022
Significant Accounting Policies [Line Items]
Cash equivalents	$ 0		$ 0
Deposit on farmland	5,002,000		4,914,000
Revenues	212,967,000	$ 2,920,000
Stock-based consulting expenses	3,359,000	$ 0	3,600,000
Retained earnings (accumulated deficit)	(80,421,000)		$ (79,355,000)
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2016-02
Significant Accounting Policies [Line Items]
Retained earnings (accumulated deficit)	$ (22,800)			$ (7,800)	$ (15,000)
Cost of Goods and Service, Product and Service Benchmark | Supplier Concentration Risk | Three Largest Commodity Suppliers
Significant Accounting Policies [Line Items]
Concentration risk, percentage	98.00%
Cost of Goods and Service, Product and Service Benchmark | Supplier Concentration Risk | Largest Food Products Supplier
Significant Accounting Policies [Line Items]
Concentration risk, percentage		45.00%
Selling, General and Administrative Expenses
Significant Accounting Policies [Line Items]
Advertising costs	$ 100,000	$ 33,000
Sadot division
Significant Accounting Policies [Line Items]
Consulting fees, percentage of net income generated by business segment	80.00%
Company restaurant sales, net of discounts
Significant Accounting Policies [Line Items]
Revenues	$ 2,301,000	2,694,000
Royalties
Significant Accounting Policies [Line Items]
Revenues	200,000	100,000
Franchise Fees
Significant Accounting Policies [Line Items]
Revenues	100,000	49,000
Rebates
Significant Accounting Policies [Line Items]
Revenues	26,000	100,000
Franchise advertising fund contributions
Significant Accounting Policies [Line Items]
Revenues	16,000	18,000
Other restaurant operating expenses | Operating Expense
Significant Accounting Policies [Line Items]
Advertising costs	40,000	100,000
Commodity sales
Significant Accounting Policies [Line Items]
Revenues	$ 210,366,000	$ 0

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Significant Accounting Policies - Property and Equipment (Details)	3 Months Ended
	Mar. 31, 2023
Furniture and equipment | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	3 years
Furniture and equipment | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	7 years
Leasehold improvements | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	1 year
Leasehold improvements | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	11 years

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Significant Accounting Policies - Intangible Assets (Details)	3 Months Ended
	Mar. 31, 2023
Franchisee agreements
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	13 years
Franchise license
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	10 years
Minimum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	2 years
Minimum | Trademarks
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	3 years
Minimum | Domain name, Customer list and Proprietary recipes
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	3 years
Minimum | Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	2 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	13 years
Maximum | Trademarks
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	5 years
Maximum | Domain name, Customer list and Proprietary recipes
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	7 years
Maximum | Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	3 years

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Significant Accounting Policies - Antidilutive Securities Excluded From Computation Of Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares	19,071	18,006
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares	18,034	17,874
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares	1,013	100
Convertible debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares	24	32

XML

Loans Receivable (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022
Receivables [Abstract]
Loan receivable	$ 0	$ 0
Reserves for uncollectible loans	$ 0		$ 100,000

XML

Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid expenses	$ 189	$ 89
Other receivables	17	228
Prepaid and Other Current Assets	$ 206	$ 317

XML

Prepaid Expenses and Other Current Assets - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Other receivables	$ 17	$ 228

XML

Deposit On Farmland - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Deposit Assets [Abstract]
Deposits assets	$ 5,002	$ 4,914
Increase (decrease) in deposit assets	$ 100

XML

Property and Equipment, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 3,496	$ 3,388
Less: accumulated depreciation	(1,816)	(1,493)
Property and equipment, net	1,680	1,895
Furniture and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,312	1,266
Vehicles
Property, Plant and Equipment [Line Items]
Property and equipment, gross	55	55
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,102	2,062
Construction in process
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 27	$ 5
Closed Locations And Future Locations
Property, Plant and Equipment [Line Items]
Less: accumulated depreciation			$ (100)

XML

Property and Equipment, Net - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Depreciation	$ 300	$ 100
Disposals	0	400
Less: accumulated depreciation	$ 1,816		$ 1,493
Closed Locations And Future Locations
Property, Plant and Equipment [Line Items]
Gain (loss) on disposal		(200)
Less: accumulated depreciation		$ 100

XML

Goodwill and Other Intangible Assets, Net - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 300,000	$ 400,000
Impairment of intangible assets finite lived	0	0
goodwill, impairment loss	$ 0	$ 0
Minimum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	2 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful life	13 years

XML

Goodwill and Other Intangible Assets, Net - Summary Of Intangible Assets (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			$ 4,611,000	$ 6,386,000
Impairment of intangible assets	$ 0	$ 0
Amortization expense	(310,000)	(351,000)
Intangible assets, net	4,301,000	6,035,000	4,611,000
Trademarks | Muscle Maker Grill
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			670,000	1,526,000
Impairment of intangible assets	0	0
Amortization expense	(83,000)	(125,000)
Intangible assets, net	587,000	1,401,000
Trademarks | SuperFit Food
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			29,000	38,000
Impairment of intangible assets	0	0
Amortization expense	(2,000)	(2,000)
Intangible assets, net	27,000	36,000
Trademarks | Pokemoto
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			118,000	153,000
Impairment of intangible assets	0	0
Amortization expense	(9,000)	(9,000)
Intangible assets, net	109,000	144,000
Franchise Agreements Muscle Maker Grill | Muscle Maker Grill
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			136,000	162,000
Impairment of intangible assets	0	0
Amortization expense	(7,000)	(6,000)
Intangible assets, net	129,000	156,000
Internet Domain Names | SuperFit Food
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			81,000	106,000
Impairment of intangible assets	0	0
Amortization expense	(6,000)	(6,000)
Intangible assets, net	75,000	100,000
Customer Lists | SuperFit Food
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			90,000	118,000
Impairment of intangible assets	0	0
Amortization expense	(7,000)	(7,000)
Intangible assets, net	83,000	111,000
Proprietary Recipes | SuperFit Food
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			103,000	135,000
Impairment of intangible assets	0	0
Amortization expense	(8,000)	(8,000)
Intangible assets, net	95,000	127,000
Proprietary Recipes | Pokemoto
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			867,000	1,028,000
Impairment of intangible assets	0	0
Amortization expense	(40,000)	(40,000)
Intangible assets, net	827,000	988,000
Non-compete agreements | SuperFit Food
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			107,000	193,000
Impairment of intangible assets	0	0
Amortization expense	(21,000)	(21,000)
Intangible assets, net	86,000	172,000
Non-compete agreements | Pokemoto
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			88,000	328,000
Impairment of intangible assets	0	0
Amortization expense	(59,000)	(59,000)
Intangible assets, net	29,000	269,000
Franchise license | Pokemoto
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross			$ 2,322,000	$ 2,599,000
Impairment of intangible assets	0	0
Amortization expense	(68,000)	(68,000)
Intangible assets, net	$ 2,254,000	$ 2,531,000

XML

Goodwill and Other Intangible Assets, Net - Future Amortization Expense (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	$ 794
2025	952
2026	594
2027	499
2028	465
Thereafter	997
Total	4,301
Trademarks | Muscle Maker Grill
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	252
2025	335
2026	0
2027	0
2028	0
Thereafter	0
Total	587
Trademarks | SuperFit Food
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	7
2025	9
2026	9
2027	2
2028	0
Thereafter	0
Total	27
Trademarks | Pokemoto
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	26
2025	35
2026	35
2027	13
2028	0
Thereafter	0
Total	109
Franchise Agreements Muscle Maker Grill | Muscle Maker Grill
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	20
2025	27
2026	27
2027	27
2028	27
Thereafter	1
Total	129
Internet Domain Names | SuperFit Food
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	19
2025	25
2026	25
2027	6
2028	0
Thereafter	0
Total	75
Customer Lists | SuperFit Food
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	21
2025	28
2026	28
2027	6
2028	0
Thereafter	0
Total	83
Proprietary Recipes | SuperFit Food
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	24
2025	32
2026	32
2027	7
2028	0
Thereafter	0
Total	95
Proprietary Recipes | Pokemoto
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	122
2025	162
2026	161
2027	161
2028	161
Thereafter	60
Total	827
Non-compete agreements | SuperFit Food
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	65
2025	21
2026	0
2027	0
2028	0
Thereafter	0
Total	86
Non-compete agreements | Pokemoto
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	29
2025	0
2026	0
2027	0
2028	0
Thereafter	0
Total	29
Franchise license | Pokemoto
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2024	209
2025	278
2026	277
2027	277
2028	277
Thereafter	936
Total	$ 2,254

XML

Goodwill and Other Intangible Assets, Net - Summary of Goodwill (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Goodwill [Roll Forward]
Beginning of period	$ 2,626,000	$ 2,626,000
Impairment of goodwill	0	0
End of period	2,626,000	2,626,000
Muscle Maker Grill
Goodwill [Roll Forward]
Beginning of period	570,000	570,000
Impairment of goodwill	0	0
End of period	570,000	570,000
Pokemoto
Goodwill [Roll Forward]
Beginning of period	1,798,000	1,798,000
Impairment of goodwill	0	0
End of period	1,798,000	1,798,000
SuperFit Food
Goodwill [Roll Forward]
Beginning of period	258,000	258,000
Impairment of goodwill	0	0
End of period	$ 258,000	$ 258,000

XML

Accounts Payables and Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Accounts payable	$ 699	$ 1,085
Accrued payroll and bonuses	102	551
Accrued expenses	102	87
Accrued professional fees	73	185
Accounts payable commodities	34,830	0
Sales taxes payable	57	45
Total accounts payable and accrued liabilities	$ 35,863	$ 1,953

XML

Accrued Stock-Based Consulting Expenses Due to Related Party - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Share-Based Payment Arrangement, Consulting Expense [Line Items]
Stock-based consulting expenses	$ 3,359	$ 0	$ 3,600
Sadot division
Share-Based Payment Arrangement, Consulting Expense [Line Items]
Consulting fees, percentage of net income generated by business segment	80.00%

XML

Notes Payable - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended
	Apr. 11, 2018	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Apr. 06, 2018
Debt Instrument [Line Items]
Convertible note payable, gross		$ 0.1		$ 0.1
2018 ARH Note | Former Parent
Debt Instrument [Line Items]
Convertible notes payable					$ 0.5
Conversion price per share					$ 3.50
Debt instrument, face amount	$ 0.4
Number of shares issued for conversion of debt	100,000
Notes Payable, Other Payables
Debt Instrument [Line Items]
Debt instrument, face amount		0.9
Repayments of debt		$ 0.1	$ 1.3
Notes Payable, Other Payables | Minimum
Debt Instrument [Line Items]
Interest rate (in percent)		3.75%
Notes Payable, Other Payables | Maximum
Debt Instrument [Line Items]
Interest rate (in percent)		8.00%

XML

Notes Payable - Maturities (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Maturities of Long-Term Debt [Abstract]
2023	$ 225
2024	121
2025	70
2026	531
Thereafter	0
Total debt	$ 947

XML

Leases - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($)
Lessee, Lease, Description [Line Items]
Option to extend, lease term (in years)	5 years
Lease cost	$ 0.1
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term (in years)	1 year
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term (in years)	10 years

XML

Leases - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Right to use asset	$ 2,189	$ 2,433
Operating leases – current	505	560
Operating leases – non-current	1,800	2,019
Total lease liabilities	$ 2,305	$ 2,579

XML

Leases - Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Operating Leases
2023	$ 565
2024	706
2025	556
2026	386
2027	300
2028	222
Thereafter	368
Total lease payments	3,103
Less imputed interest	(798)
Present value of lease liabilities	$ 2,305	$ 2,579

XML

Leases - Lease Term and Discount Rates (Details)	Mar. 31, 2023
Weighted-average remaining lease term (in years)
Operating leases	5 years 3 days
Weighted-average discount rate
Operating leases	12.00%

XML

Deferred Revenue (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Deferred revenues, net	$ 1,318	$ 1,371
Less: deferred revenue, current	(90)	(95)
Deferred revenues, non-current	$ 1,228	$ 1,276

XML

Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Other Liabilities Disclosure [Abstract]
Gift card liability	$ 26	$ 25
Co-op advertising fund liability	87	79
Marketing development brand liability	41	35
Advertising fund liability	41	43
Total other liabilities	$ 195	$ 182

XML

Income Taxes - Deferred Tax Assets And Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Deferred tax assets:
Net operating loss carryforwards	$ 10,693	$ 10,615
Receivable allowance	6	5
Stock-based compensation	313	15
Intangible assets	38	314
Deferred revenues	273	204
Leases	25	32
Gross deferred tax asset	11,348	11,185
Deferred tax liabilities:
Property and equipment	(103)	(160)
Gross deferred tax liabilities	(103)	(160)
Net deferred tax assets	11,246	11,025
Valuation allowance	(11,246)	(11,025)
Net deferred tax asset, net of valuation allowance	$ 0	$ 0

XML

Income Taxes - Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Federal:
Current	$ 0		$ 0
Deferred	0		0
State and local:
Current	3		25
Deferred	0		0
Current and deferred income tax expense (benefit)	3		25
Change in valuation allowance	0		0
Income tax expense	$ 3	$ 2	$ 25

XML

Income Taxes - Reconciliation of Statutory Federal Income Tax Rate (Details)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Federal income tax benefit at statutory rate	21.00%	21.00%
Effective Income Tax Rate Reconciliation, Percent [Abstract]
State income tax benefit, net of federal impact	(0.20%)	(0.50%)
Permanent differences	(1.90%)	(0.10%)
PPP loan forgiveness	0.00%	0.40%
Return to provision adjustments	0.00%	3.30%
Deferred tax asset true up- State	0.00%	(14.50%)
Deferred tax asset true up- Federal	0.00%	(6.80%)
Other	0.10%	0.00%
Change in valuation allowance	(20.70%)	(3.30%)
Effective income tax rate	(1.70%)	(0.50%)

XML

Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Operating loss carryforwards	$ 63.6
Valuation allowance	11.2	$ 11.0
Increase (decrease) to valuation allowance	$ 0.2

XML

Commitments and Contingencies - Narrative (Details)								3 Months Ended	7 Months Ended	22 Months Ended
	Mar. 21, 2023 USD ($)	Nov. 16, 2022 USD ($)	Nov. 14, 2022 USD ($) $ / shares shares	Oct. 25, 2022 USD ($)	Apr. 24, 2022 USD ($)	Jan. 23, 2020 USD ($)	Mar. 07, 2019 USD ($)	Mar. 31, 2023 USD ($) restaurant $ / shares shares	Dec. 31, 2022 USD ($) installment $ / shares shares	May 01, 2020 USD ($)	Feb. 28, 2023	Jan. 19, 2023 shares	Mar. 31, 2022 USD ($) restaurant	Oct. 25, 2021 restaurant
Loss Contingencies [Line Items]
Common stock, par value (in dollars per share) | $ / shares								$ 0.0001	$ 0.0001
Common stock, issued (in shares) | shares								32,200,000	29,300,000
Common stock, outstanding (in shares) | shares								32,200,000	29,300,000			29,300,000
Number of days to issue common stock			10 days
Deferred revenues, net								$ 1,318,000	$ 1,371,000
Number of restaurants to be franchised | restaurant														40
Accrued sales tax liability								100,000	$ 44,600
Company vs. Convertible Note Holder, Iowa District Court for Polk County | Settled Litigation
Loss Contingencies [Line Items]
Damages awarded					$ 100,000
Convertible notes payable					100,000
Litigation settlement expense					$ 200,000
Payments for legal settlements										$ 40,000
Payments for legal settlements, number of installments | installment									7
payments for legal settlement per installment									$ 10,000
Company vs. Contractor, State of Texas in El Paso County | Pending Litigation
Loss Contingencies [Line Items]
Damages sought							$ 33,000
Accrual for loss contingency								30,000	$ 30,000
Company vs. Company-Owned Store, Judicial Council of California | Pending Litigation
Loss Contingencies [Line Items]
Damages sought						$ 100,000
Aggia LLC FC
Loss Contingencies [Line Items]
Common stock, par value (in dollars per share) | $ / shares			$ 0.0001
Share price | $ / shares			$ 1.5625
Common stock, issued (in shares) | shares			14,400,000
Percentage of issued and outstanding shares, maximum authorized amount			49.90%
Common stock, outstanding (in shares) | shares			14,400,000
Percentage of issued and outstanding shares			19.99%								20.00%
Executive Employment Agreement, Roper Agreement | Chief Executive Officer
Loss Contingencies [Line Items]
Base salary at annualized rate		$ 400,000
Severance payment, term of salary		36 months
Severance payment, term of salary, second anniversary of agreement		18 months
Executive Employment Agreement, Roper Agreement | Chief Executive Officer | Deferred Bonus, Approval Of Shareholder Matters
Loss Contingencies [Line Items]
Additional bonus		$ 100,000
Executive Employment Agreement, Roper Agreement | Chief Executive Officer | Deferred Bonus, Designated Director Approval
Loss Contingencies [Line Items]
Additional bonus		25,000
Executive Employment Agreement, Black Agreement | Chief Financial Officer
Loss Contingencies [Line Items]
Base salary at annualized rate	$ 200,000
Severance payment, term of salary	36 months
Severance payment, term of salary, second anniversary of agreement	6 months
Executive Employment Agreement, Black Agreement | Chief Financial Officer | Deferred Bonus, Approval Of Shareholder Matters
Loss Contingencies [Line Items]
Additional bonus	$ 100,000
Executive Employment Agreement, Black Agreement | Chief Financial Officer | Deferred Bonus, Designated Director Approval
Loss Contingencies [Line Items]
Additional bonus	$ 25,000
Executive Employment Agreement, Black Agreement | Chief Financial Officer | Deferred Bonus
Loss Contingencies [Line Items]
Additional bonus, percentage of annual salary	50.00%
Executive Employment Agreement, Miller Agreement | Chief Operating Officer
Loss Contingencies [Line Items]
Base salary at annualized rate		$ 300,000
Severance payment, term of salary		36 months
Severance payment, term of salary, second anniversary of agreement		12 months
Executive Employment Agreement, Miller Agreement | Chief Operating Officer | Deferred Bonus, Designated Director Approval
Loss Contingencies [Line Items]
Additional bonus		$ 25,000
Executive Employment Agreement, Miller Agreement | Chief Operating Officer | Deferred Bonus
Loss Contingencies [Line Items]
Additional bonus, percentage of annual salary		75.00%
Executive Employment Agreement, Mohan Agreement | Chief Investment Officer
Loss Contingencies [Line Items]
Base salary at annualized rate		$ 200,000
Severance payment, term of salary		36 months
Severance payment, term of salary, second anniversary of agreement		6 months
Executive Employment Agreement, Mohan Agreement | Chief Investment Officer | Deferred Bonus, Approval Of Shareholder Matters
Loss Contingencies [Line Items]
Additional bonus		$ 100,000
Executive Employment Agreement, Mohan Agreement | Chief Investment Officer | Deferred Bonus, Designated Director Approval
Loss Contingencies [Line Items]
Additional bonus		$ 25,000
Executive Employment Agreement, Mohan Agreement | Chief Investment Officer | Deferred Bonus
Loss Contingencies [Line Items]
Additional bonus, percentage of annual salary		75.00%
Executive Employment Agreement, Infante Agreement | Chief Marketing Officer
Loss Contingencies [Line Items]
Base salary at annualized rate		$ 200,000
Severance payment, term of salary		6 months
Severance payment, term of salary, second anniversary of agreement		36 months
Executive Employment Agreement, Infante Agreement | Chief Marketing Officer | Deferred Bonus, Designated Director Approval
Loss Contingencies [Line Items]
Additional bonus		$ 25,000
Executive Employment Agreement, Infante Agreement | Chief Marketing Officer | Deferred Bonus
Loss Contingencies [Line Items]
Additional bonus, percentage of annual salary		25.00%
Maximum | Aggia LLC FC
Loss Contingencies [Line Items]
Notes payable			$ 71,500,000
Maximum | Aggia LLC FC | Operating Expense
Loss Contingencies [Line Items]
Reimbursement of operating costs								100,000
Maximum | Aggia LLC FC | General and Administrative Expense
Loss Contingencies [Line Items]
Reimbursement of operating costs								200,000
Maximum | Aggia LLC FC | Labor | Operating Expense
Loss Contingencies [Line Items]
Reimbursement of operating costs								$ 600,000
Pokemoto | Franchise Agreement
Loss Contingencies [Line Items]
Number of potentially new restaurants | restaurant								5					11
Deferred revenues, net								$ 100,000					$ 200,000
Muscle Maker Development International LLC | Master Franchise Agreement | Almatrouk Catering Company – OPC
Loss Contingencies [Line Items]
Consideration payable upon occurrence of various events				$ 200,000
Consideration payable upon execution of franchise agreements for each individual restaurant				20,000
Royalty fee				1,000
Deposit payment				$ 20,000

XML

Reportable Operating Segments - Summary Of Operating Segments (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Revenues:
Revenues	$ 212,967,000	$ 2,920,000
Operating Costs and Expenses:
Depreciation and amortization expenses	633,000	476,000
Franchise advertising fund expenses	16,000	18,000
Pre-opening expenses	36,000	0
Post-closing expenses	94,000	0
Stock-based consulting expenses	3,359,000	0	$ 3,600,000
Sales, general and administrative expenses	2,142,000	1,324,000
Total costs and expenses	214,574,000	4,907,000
Loss from operations	(1,607,000)	(1,987,000)
Other Income:
Other income / (expense)	0	(19,000)
Interest income / (expense), net	3,000	(18,000)
Change in fair value of accrued compensation	541,000	0
Gain on debt extinguishment	0	140,000
Total other income, net	544,000	103,000
Loss Before Income Tax	(1,063,000)	(1,884,000)
Income tax	3,000	2,000	$ 25,000
Net loss	(1,066,000)	(1,886,000)
Commodity sales
Revenues:
Revenues	210,366,000	0
Company restaurant sales, net of discounts
Revenues:
Revenues	2,301,000	2,694,000
Franchise royalties and fees
Revenues:
Revenues	284,000	208,000
Franchise advertising fund contributions
Revenues:
Revenues	16,000	18,000
Total commodity operating expenses
Operating Costs and Expenses:
Operating costs and expenses	205,829,000	0
Commodity cost
Operating Costs and Expenses:
Operating costs and expenses	205,055,000	0
Labor
Operating Costs and Expenses:
Operating costs and expenses	620,000	0
Other commodity operating expenses
Operating Costs and Expenses:
Operating costs and expenses	154,000	0
Total restaurant operating expenses
Operating Costs and Expenses:
Operating costs and expenses	2,465,000	3,089,000
Food and beverage costs
Operating Costs and Expenses:
Operating costs and expenses	839,000	1,026,000
Labor
Operating Costs and Expenses:
Operating costs and expenses	880,000	1,073,000
Rent
Operating Costs and Expenses:
Operating costs and expenses	274,000	340,000
Other restaurant operating expenses
Operating Costs and Expenses:
Operating costs and expenses	472,000	650,000
Operating Segments | Restaurant division
Revenues:
Revenues	2,601,000	2,920,000
Operating Costs and Expenses:
Depreciation and amortization expenses	316,000	119,000
Franchise advertising fund expenses	16,000	18,000
Pre-opening expenses	36,000
Post-closing expenses	93,000
Stock-based consulting expenses	0
Sales, general and administrative expenses	82,000	257,000
Total costs and expenses	3,008,000	3,483,000
Loss from operations	(407,000)	(563,000)
Other Income:
Other income / (expense)		2,000
Interest income / (expense), net	2,000	3,000
Change in fair value of accrued compensation	0
Gain on debt extinguishment		140,000
Total other income, net	2,000	145,000
Loss Before Income Tax	(405,000)	(418,000)
Income tax	0	0
Net loss	(405,000)	(418,000)
Operating Segments | Sadot division
Revenues:
Revenues	210,366,000	0
Operating Costs and Expenses:
Depreciation and amortization expenses	0	0
Franchise advertising fund expenses	0	0
Pre-opening expenses	0
Post-closing expenses	0
Stock-based consulting expenses	0
Sales, general and administrative expenses	286,000	0
Total costs and expenses	206,115,000	0
Loss from operations	4,251,000	0
Other Income:
Other income / (expense)		0
Interest income / (expense), net	0	0
Change in fair value of accrued compensation	0
Gain on debt extinguishment		0
Total other income, net	0	0
Loss Before Income Tax	4,251,000	0
Income tax	0	0
Net loss	4,251,000	0
Operating Segments | Commodity sales | Restaurant division
Revenues:
Revenues	0
Operating Segments | Commodity sales | Sadot division
Revenues:
Revenues	210,366,000
Operating Segments | Company restaurant sales, net of discounts | Restaurant division
Revenues:
Revenues	2,301,000	2,694,000
Operating Segments | Company restaurant sales, net of discounts | Sadot division
Revenues:
Revenues	0	0
Operating Segments | Franchise royalties and fees | Restaurant division
Revenues:
Revenues	284,000	208,000
Operating Segments | Franchise royalties and fees | Sadot division
Revenues:
Revenues	0	0
Operating Segments | Franchise advertising fund contributions | Restaurant division
Revenues:
Revenues	16,000	18,000
Operating Segments | Franchise advertising fund contributions | Sadot division
Revenues:
Revenues	0	0
Operating Segments | Total commodity operating expenses | Restaurant division
Operating Costs and Expenses:
Operating costs and expenses	0
Operating Segments | Total commodity operating expenses | Sadot division
Operating Costs and Expenses:
Operating costs and expenses	205,829,000
Operating Segments | Commodity cost | Restaurant division
Operating Costs and Expenses:
Operating costs and expenses	0
Operating Segments | Commodity cost | Sadot division
Operating Costs and Expenses:
Operating costs and expenses	205,055,000
Operating Segments | Labor | Restaurant division
Operating Costs and Expenses:
Operating costs and expenses	0
Operating Segments | Labor | Sadot division
Operating Costs and Expenses:
Operating costs and expenses	620,000
Operating Segments | Other commodity operating expenses | Restaurant division
Operating Costs and Expenses:
Operating costs and expenses	0
Operating Segments | Other commodity operating expenses | Sadot division
Operating Costs and Expenses:
Operating costs and expenses	154,000
Operating Segments | Total restaurant operating expenses | Restaurant division
Operating Costs and Expenses:
Operating costs and expenses	2,465,000	3,089,000
Operating Segments | Total restaurant operating expenses | Sadot division
Operating Costs and Expenses:
Operating costs and expenses	0	0
Operating Segments | Food and beverage costs | Restaurant division
Operating Costs and Expenses:
Operating costs and expenses	839,000	1,026,000
Operating Segments | Food and beverage costs | Sadot division
Operating Costs and Expenses:
Operating costs and expenses	0	0
Operating Segments | Labor | Restaurant division
Operating Costs and Expenses:
Operating costs and expenses	880,000	1,073,000
Operating Segments | Labor | Sadot division
Operating Costs and Expenses:
Operating costs and expenses	0	0
Operating Segments | Rent | Restaurant division
Operating Costs and Expenses:
Operating costs and expenses	274,000	340,000
Operating Segments | Rent | Sadot division
Operating Costs and Expenses:
Operating costs and expenses	0	0
Operating Segments | Other restaurant operating expenses | Restaurant division
Operating Costs and Expenses:
Operating costs and expenses	472,000	650,000
Operating Segments | Other restaurant operating expenses | Sadot division
Operating Costs and Expenses:
Operating costs and expenses	0	0
Corporate, Non-Segment
Revenues:
Revenues	0	0
Operating Costs and Expenses:
Depreciation and amortization expenses	317,000	357,000
Franchise advertising fund expenses	0	0
Pre-opening expenses	0
Post-closing expenses	1,000
Stock-based consulting expenses	3,359,000
Sales, general and administrative expenses	1,774,000	1,067,000
Total costs and expenses	5,451,000	1,424,000
Loss from operations	(5,451,000)	(1,424,000)
Other Income:
Other income / (expense)		(21,000)
Interest income / (expense), net	1,000	(21,000)
Change in fair value of accrued compensation	541,000
Gain on debt extinguishment		0
Total other income, net	542,000	(42,000)
Loss Before Income Tax	(4,909,000)	(1,466,000)
Income tax	3,000	2,000
Net loss	(4,912,000)	(1,468,000)
Corporate, Non-Segment | Commodity sales
Revenues:
Revenues	0
Corporate, Non-Segment | Company restaurant sales, net of discounts
Revenues:
Revenues	0	0
Corporate, Non-Segment | Franchise royalties and fees
Revenues:
Revenues	0	0
Corporate, Non-Segment | Franchise advertising fund contributions
Revenues:
Revenues	0	0
Corporate, Non-Segment | Total commodity operating expenses
Operating Costs and Expenses:
Operating costs and expenses	0
Corporate, Non-Segment | Commodity cost
Operating Costs and Expenses:
Operating costs and expenses	0
Corporate, Non-Segment | Labor
Operating Costs and Expenses:
Operating costs and expenses	0
Corporate, Non-Segment | Other commodity operating expenses
Operating Costs and Expenses:
Operating costs and expenses	0
Corporate, Non-Segment | Total restaurant operating expenses
Operating Costs and Expenses:
Operating costs and expenses	0	0
Corporate, Non-Segment | Food and beverage costs
Operating Costs and Expenses:
Operating costs and expenses	0	0
Corporate, Non-Segment | Labor
Operating Costs and Expenses:
Operating costs and expenses	0	0
Corporate, Non-Segment | Rent
Operating Costs and Expenses:
Operating costs and expenses	0	0
Corporate, Non-Segment | Other restaurant operating expenses
Operating Costs and Expenses:
Operating costs and expenses	$ 0	$ 0

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Reportable Operating Segments - Narrative (Details)	3 Months Ended
	Mar. 31, 2023 segment
Segment Reporting [Abstract]
Number of distinct operating units	2

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Equity - Narrative (Details) - USD ($)											3 Months Ended
	Mar. 15, 2023	Feb. 27, 2023	Nov. 29, 2022	Jun. 30, 2022	Feb. 24, 2022	Jan. 18, 2022	Jan. 03, 2022	Nov. 17, 2021	Apr. 07, 2021	Apr. 06, 2021	Mar. 31, 2023	Mar. 31, 2022	Mar. 27, 2023	Feb. 28, 2023	Jan. 05, 2023	Dec. 31, 2022	Nov. 14, 2022	Oct. 12, 2022	Jul. 14, 2022	Jun. 08, 2022	Apr. 04, 2022	Jan. 06, 2022	Oct. 07, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock, issued (in shares)											32,200,000					29,300,000
Options awarded (in shares)	100,000										600,000	0
Change in fair value of accrued compensation											$ 541,000	$ 0
Warrants, number of securities called by warrants or rights (in shares)					1,200,000		1,200,000
Common stock percent										4.00%
Common stock, par value (in dollars per share)											$ 0.0001					$ 0.0001
Issued (in dollars per share)	$ 1.51	$ 1.51									$ 1.51	$ 0
Stock-based compensation expense											$ 3,400,000	$ 100,000
Aggia LLC FC
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock, issued (in shares)																	14,400,000
Common stock, par value (in dollars per share)																	$ 0.0001
General and Administrative Expense
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation expense											58,700	100,000
Share-Based Payment Arrangement, Expense
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation expense											$ 3,400,000	$ 0
Private Placement
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Aggregate purchase price of common stock								$ 15,000,000	$ 10,000,000
Number of new stock issued during the period (in shares)								6,800,000	1,300,000
price per share (in dollars per share)								$ 1.385	$ 2.43
Class of warrant or right, exercise price of warrant (in dollars per share)								$ 1.385	$ 0.01	$ 2.916
Warrants and rights outstanding, term (in years)								5 years	5 years 6 months
Sale of stock, period to file registration statement								30 days	30 days
Sale of stock, period to declare registration statement effective								90 days	90 days
Common stock percent										8.00%
Common stock, par value (in dollars per share)								$ 0.0001
Placement Agent
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of warrant or right, exercise price of warrant (in dollars per share)								$ 1.662
Warrants and rights outstanding, term (in years)								5 years		5 years
Common stock percent								4.00%
Warrant exercisable period								6 months		6 months
Placement Agent | Maximum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock percent								8.00%
Common Warrant | Private Placement
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants, number of securities called by warrants or rights (in shares)									4,100,000
Prefunded Warrant | Private Placement
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants, number of securities called by warrants or rights (in shares)								4,100,000	2,900,000
Class of warrant or right, exercise price of warrant (in dollars per share)								$ 0.0001	$ 2.42
Common Stock
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of new stock issued during the period (in shares)				30,900
Common Stock | Private Placement
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants, number of securities called by warrants or rights (in shares)								10,800,000
Warrants
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Proceeds from warrant exercises			$ 44
Warrants | Private Placement
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Class of warrant or right, exercise price of warrant (in dollars per share)								$ 1.3849
Prefunded Warrant
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized			400,000
Warrants
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Issued (in shares)			400,000		1,200,000		1,200,000				0	0
Options
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Vesting period	5 years	5 years
Share-Based Payment Arrangement, Nonemployee
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized												100,000			31,300			100,000	100,000			39,600
Share-Based Payment Arrangement, Nonemployee | Aggia LLC FC
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized													2,800,000
Share-Based Payment Arrangement, Nonemployee | Consultant
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Issued common stock (in shares)						30,000
Fair value of common stock issued						$ 15,600
Share-Based Payment Arrangement, Nonemployee | Member of Executive Team
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized																					20,000
Share-Based Payment Arrangement, Nonemployee | Contractor
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized																				5,000
Share-Based Payment Arrangement, Employee | Officers And Directors
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options awarded (in shares)		500,000
2021 Equity Incentive Plan
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock reserved for future issuance (in shares)																							1,500,000
Common stock, issued (in shares)											1,200,000
Options awarded (in shares)											300,000
2023 Equity Incentive Plan
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock reserved for future issuance (in shares)														2,500,000
Common stock, issued (in shares)											0
Options awarded (in shares)											68,900

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Equity - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended		12 Months Ended
	Mar. 15, 2023	Feb. 27, 2023	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2021
Number of options
Beginning balance (in shares)			412,500	100,000	100,000
Issued (in shares)	100,000		600,000	0
Exercised (in shares)			0	0
Forfeited (in shares)			0	0
Ending balance (in shares)			1,212,500	100,000	412,500	100,000
Exercisable (in shares)			190,019	100,000
Weighted-average exercise price
Beginning balance (in dollars per share)			$ 1.52	$ 5.00	$ 5.00
Issued (in dollars per share)	$ 1.51	$ 1.51	1.51	0
Exercised (in dollars per share)			0	0
Forfeited (in dollars per share)			0	0
Ending balance (in dollars per share)			1.52	5.00	$ 1.52	$ 5.00
Exercisable (in dollars per share)			$ 3.00	$ 5.00
Additional Disclosures
Weighted-average remaining life, outstanding (in years)			5 years	1 year 7 months 28 days	3 years 6 months 21 days	1 year 10 months 24 days
Weighted-average remaining life, exercisable (in years)			1 year 6 months 3 days	1 year 7 months 28 days
Weighted-average remaining life, issued (in years)			6 years 2 months 1 day
Aggregate intrinsic value			$ 206		$ 156
Aggregate intrinsic value, exercisable			$ 40

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Equity - Option Valuation Assumptions (Details) - Options	3 Months Ended
	Mar. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expected term (years)	5 years
Expected dividends	0.00%
Minimum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Risk free interest rate	1.53%
Expected volatility	59.10%
Maximum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Risk free interest rate	4.33%
Expected volatility	156.87%

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Equity - Warrants Activity (Details) - Warrants - $ / shares				3 Months Ended		12 Months Ended
	Nov. 29, 2022	Feb. 24, 2022	Jan. 03, 2022	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2021
Number of Warrants
Beginning balance (in shares)				18,033,640	20,284,016	20,284,016
Issued (in shares)	400,000	1,200,000	1,200,000	0	0
Exercised (in shares)				0	(2,410,110)
Forfeited (in shares)				0	0
Ending balance (in shares)				18,033,640	17,873,906	18,033,640	20,284,016
Exercisable (in shares)				18,033,640	17,873,906
Weighted-average exercise price
Beginning balance (in dollars per share)				$ 1.93	$ 1.60	$ 1.60
Issued (in dollars per share)				0	0
Exercised (in dollars per share)				0	0
Forfeited (in dollars per share)				0	0
Ending balance (in dollars per share)				1.93	1.90	$ 1.93	$ 1.60
Exercisable (in dollars per share)				$ 1.93	$ 1.90
Additional Disclosures
Weighted-average remaining life, outstanding (in years)				3 years 3 months 3 days	4 years 3 months 18 days	3 years 6 months 3 days	4 years
Weighted-average remaining life, exercisable (in years)				3 years 3 months 3 days	4 years 3 months 18 days

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Related Party Transactions - Narrative (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2023 USD ($) shares	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($) shares	Feb. 28, 2023 director shares	Jan. 19, 2023 shares	Nov. 14, 2022 shares	Dec. 31, 2021 shares
Related Party Transaction [Line Items]
Common stock, outstanding (in shares) | shares	32,200,000		29,300,000		29,300,000
Common stock, outstanding, represented at special meeting (in shares) | shares				17,200,000
Common stock, authorized (in shares) | shares	150,000,000		150,000,000	150,000,000			50,000,000
Common stock, issued (in shares) | shares	32,200,000		29,300,000
Number of directors available for nomination | director				8
Stock-based consulting expenses | $	$ 3,359	$ 0	$ 3,600
Accrued stock-based compensation expense - related party | $	$ 3,400		$ 3,603
Aggia LLC FC
Related Party Transaction [Line Items]
Common stock, outstanding (in shares) | shares						14,400,000
Percentage of issued and outstanding shares				20.00%		19.99%
Common stock, issued (in shares) | shares						14,400,000
Ownership percentage (in shares)	8.90%
Stock-based consulting expenses | $	$ 3,400
Aggia LLC FC | Maximum | Operating Expense
Related Party Transaction [Line Items]
Reimbursement of operating costs | $	100
Aggia LLC FC | Maximum | General and Administrative Expense
Related Party Transaction [Line Items]
Reimbursement of operating costs | $	200
Aggia LLC FC | Labor | Maximum | Operating Expense
Related Party Transaction [Line Items]
Reimbursement of operating costs | $	$ 600

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Subsequent Events - Narrative (Details) - Subsequent Event - USD ($) $ in Thousands	Apr. 13, 2023	Apr. 05, 2023
2023 Share Repurchase Program
Subsequent Event [Line Items]
Share repurchase program, authorized amount	$ 2,000
Board Of Directors
Subsequent Event [Line Items]
Shares authorized		29,700